Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

UK Commercial Property Lending Hits Decade High Despite Subdued Demand – Breeden

UK commercial real estate (CRE) lending reached £52.7bn in 2025, the highest level for a decade and 29% higher than the previous year, according to Bayes Business School research cited by Toby Breeden, new business director at Crystal Specialist Finance. The picture is mixed, though: the Bank of England's Q2 Credit Conditions Survey reported declining demand for lending from small and medium-sized businesses, with demand linked to commercial real estate falling sharply during the quarter.

Refinancing dominates the market

Non-bank lenders increased new lending by 51%, while UK banks grew theirs by 29%. Around 60% of 2025 lending was already refinancing rather than new acquisition finance, and approximately £33bn of CRE is expected to mature during 2026 and require refinancing. Breeden describes this as an enormous advice opportunity for brokers.

He cautions that this is not simply a £33bn remortgage market. Commercial property values, debt costs and rental coverage have changed significantly since many facilities were originally agreed. Bayes reports that 13% of loans tested now have interest cover below one times, while only 37% have coverage exceeding two times.

Early conversations and structural shifts

Breeden argues conversations with commercial borrowers need to start much earlier. Borrowers may find their original lender's appetite has changed, valuations may have shifted, or interest cover may no longer fit. Such deals require expertise rather than being necessarily bad deals.

A structural shift is also under way. Outstanding CRE debt rose by only 0.8% last year to £174bn despite the surge in new lending, meaning lenders are competing intensely for existing assets and refinancing opportunities. Development finance represented 16% of new lending last year and 19% of outstanding CRE debt, with approximately £32bn of development lending currently outstanding.

What this means for letting agents and inventory clerks

For property professionals, the lesson is to broaden client conversations: a residential landlord may also own commercial premises, an SME director may own their trading property personally, and a property investor may be considering semi-commercial assets, refurbishment or development. Breeden argues the industry should ask these questions first rather than waiting for customers to request commercial finance.

Commercial lending in 2026, he says, is increasingly about helping existing borrowers restructure the money they already have. With £33bn requiring refinancing this year, that opportunity is already in front of the industry.