As featured in Institutional Real Estate, Inc, Richard Taylor, Partner and Head of Building Consultancy at Workman, shares his views on what the UK commercial real estate market does not tell new investors.

The United Kingdom is attracting capital from investors who have never owned a British building before. The opportunity is real, but so are the blind spots. Getting the technical and regulatory diligence right, before the money moves, is what separates a good UK entry from an expensive lesson.

There is a new kind of buyer at the table for UK commercial real estate. Foreign-domiciled family offices and high-net-worth capital have become a significant source of investment, with PwC recording a 219 percent increase in deal volumes between 2023 and 2025. Smaller pension funds and institutional investors diversifying into the United Kingdom for the first time are moving alongside them.

There is good reason for the interest. UK real estate offers scale, transparency and a legal framework that international capital trusts. But familiarity with a market is not the same as understanding it, and we are seeing new entrants underestimate the risks specific to UK assets. Closing that knowledge gap before a transaction takes place is a surefire way to ensure this market works for them.

A significant part of work for a consultancy firm such as Workman now sits at exactly this point: helping new entrants understand what they are buying, what it will cost to run and what regulatory obligations come attached to the keys. Three areas consistently catch new entrants out: technical risk, regulatory risk, and the back-end liquidity questions that surface when an asset comes to be financed or sold.

For years, technical due diligence (TDD) followed a predictable pattern. Surveyors inspected a building, produced a lengthy narrative report cataloguing every defect and handed over a document that was thorough but often unusable. It described what was wrong, without describing the commercial implications for the deal.

That model is not fit for a new entrant trying to price risk into an unfamiliar market. What we now provide is TDD as a commercial tool, not a compliance exercise, built around four items. The first of these is risk appraisal that enables a decision: distinguishing deficiencies that are manageable post-acquisition from issues serious enough to threaten the transaction or justify a genuine price adjustment. The second is alignment with the investor’s actual strategy, since a defect immaterial to a long-term institutional holder can be critical to a fund planning a shorter exit. Thirdly, there is the need for financial integration: translating technical findings into capex schedules and liability figures that plug straight into the buyer’s financial model, rather than sitting in a report nobody on the deal team quite knows how to use. The final item is ESG and regulatory foresight, because the United Kingdom’s tightening Minimum Energy Efficiency Standards and EPC requirements mean a compliant building today can be a liability within five years.

For a new entrant, the practical takeaway is to interrogate the adviser as much as the asset. Ask whether the TDD provider begins with your strategy and risk appetite, or applies the same template regardless of buyer. Ask whether they can separate transaction-threatening risk from manageable defect, and explain it in terms your investment committee will understand. Ask, too, whether sustainability assessment is embedded in their core offering, or bolted on as an afterthought. If the answers are vague, interrogate further.

International investors familiar with other regulatory regimes often wrongly assume UK building safety compliance is a variation on a familiar theme.

The Building Safety Act has fundamentally reset how building ownership responsibility works in the country, particularly for higher-risk residential buildings, but with implications that ripple out to mixed-use and commercial assets too. The Act does not explicitly demand a planned preventative maintenance programme. But it places clear, personal duties on what it calls “accountable persons” and “principal accountable persons”, to identify, assess and manage building safety risk. These duties require evidence in a documented, auditable record of what has been done, when, and why. That evidence feeds directly into safety case reports and the wider golden thread of information that the Building Safety Regulator expects to see. A new entrant acquiring a UK residential or mixed-use asset without understanding this is acquiring a statutory obligation they may not have priced.

Accountability under the Act sits with those responsible for the building and cannot be delegated away. Relying on lease obligations or third-party contractors does not remove that responsibility. If something goes wrong, the “accountable person” answers for it, regardless of who they believed was managing the risk. For a fund entering the UK market for the first time, understanding where that accountability will sit post-completion, and what evidence base they are inheriting, should be a pre-acquisition question, not a post-ownership discovery.

Climate risk sits alongside this. Physical climate exposure, flood risk, overheating and the direction of travel on energy performance standards are all now standard components of a properly conducted pre-acquisition appraisal, and factor into lender and insurer appetite. Treating them as add-ons rather than day-one input is one of the more common and avoidable mistakes.

New entrants targeting residential and mixed-use assets face an additional layer of complexity. The UK residential sector has moved through substantial regulatory change: tightening safety case requirements, an evolving service charge framework, and a push toward greater transparency between owner and occupier. The updated RICS Service Charge Code, which took effect at the end of 2025, is a good example. It demands budgets issued with proper explanatory commentary, fixed rather than percentage-based management fees, and clear justification for any expenditure. For an overseas buyer used to a different service charge culture, this is not a minor detail. It shapes income certainty, occupier relations and the defensibility of a budget at renewal, and it needs to be understood before completion, not at the first reconciliation.

This is where Planned Preventative Maintenance (PPM) earns its place, and where new entrants often underuse a tool that is directly available to them.

A PPM has traditionally been thought of as an operational document, commissioned after completion to plan future works. But a current, well-evidenced PPM is one of the clearest ways for a prospective buyer to understand exactly what they are acquiring before capital commits.

As a firm, Workman has recorded a 40 percent increase in PPM instructions over the past four years, completing 203 survey instructions in 2025 alone, covering 5.7 million square feet (530,000 square metres) of commercial, retail, and industrial property across the United Kingdom, up from 3.4 million square feet (316,000 square metres) in 2021. Institutional investors are among the fastest-growing client group requesting them, and they are requesting them ahead of transacting, not after.

A well-executed PPM gives a prospective owner a structured, evidence-based view of future expenditure by function, by year and by priority. For a new entrant unfamiliar with UK building stock, lease structures and service charge conventions, that is a fast, credible way to build the local knowledge that a domestic institutional buyer would already have. It answers the questions that will otherwise surface at financing or exit anyway: What is the condition, the capex profile, the risk of unbudgeted expenditure during the hold period? More buyers and their advisers are requesting this documentation as standard, and its absence, or an out-of-date version, now attracts additional scrutiny and price pressure of its own.

Although traditionally most associated with multitenant assets, where service charges provide the mechanism for cost recovery, but even where full repairing and insuring leases place the maintenance burden on occupiers, investors increasingly want visibility of condition and future liability before they buy. There is a financing dimension too. Lenders assessing an unfamiliar borrower in an unfamiliar market lean heavily on the quality of technical evidence behind the loan, and a credible, current PPM gives them confidence in the capex assumptions underpinning the debt, which in turn affects terms and speed of execution. For a first-time UK buyer trying to establish a track record with domestic lenders, that is a significantly different starting position.

None of this is about discouraging new capital. It is about making sure that committed capital performs the way the investor expects it to.

The new entrants who do this well treat technical and regulatory diligence as integrated inputs to pricing and negotiation, not a box-ticking formality running in parallel to the real decision making: commissioning TDD built around their actual strategy, understanding precisely where Building Safety Act accountability will sit from day one, and using a live PPM as a pre-acquisition knowledge tool rather than a post-completion task.

Done properly, this gives a buyer the confidence to move decisively, price accurately, and negotiate from genuine understanding rather than assumption.

The UK market rewards investors who equip themselves with expert knowledge and understanding.

Read the full article on Institutional Real Estate, Inc.