Back Leverage and Building Risk: Why Technical Due Diligence Matters More Than Ever

Back leverage is playing an increasingly important role in real estate finance, particularly as lenders seek greater flexibility and ways to optimise capital deployment. Against this backdrop, the quality of technical due diligence has become a defining factor in how lenders assess risk, structure loans, and maintain confidence throughout the life of the facility.
We are seeing clear evidence of this shift in the market. Debt providers are demanding more rigorous analysis of planning status, programme certainty, cost control and delivery capability – areas which have a direct bearing on the viability and value of the asset. Lenders are also scrutinising development and contractor risk in greater depth, recognising that even well planned schemes can face delays and cost pressures that undermine returns.
This is particularly relevant for schemes involving higher risk buildings. While building safety has been a key focus for several years, the formalisation of the Gateway regime under the Building Safety Act has introduced new scrutiny around approval timelines and compliance. Gateway Two approvals in particular can cause programme delays if design information is incomplete or coordination is weak. These delays can directly affect loan drawdowns, valuation assumptions and exit timing.
Lenders are increasingly alert to these issues. Many now request detailed commentary on how projects will meet Gateway requirements, introducing specific conditions around approval stages and seeking clarity on submission strategies.
This evolving risk landscape reinforces the need for early, high quality technical advice. A well-structured initial due diligence report does more than assess design and construction viability – it provides a forward-looking view of programme resilience, regulatory exposure and delivery certainty. It enables funders to make more informed decisions on structure, pricing and timing while reducing risk.
In the current lending environment, clarity and confidence are essential. Technical due diligence plays a central role in safeguarding loan performance, supporting credit decisions and ensuring that capital remains deployable in a market where risk and regulation continue to evolve.
At Kingswood we combine technical rigour with market insight to deliver the clarity lenders need to act with confidence. As the importance of due diligence continues to grow so too does our commitment to supporting better outcomes for our clients.
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