Press Releases

• Build-to-Rent (BtR) continues to make a critical contribution to housing supply with the total number of completed homes over 120,000
• Future supply of BtR at risk with construction contracting and a fall in the number of planning applications
• BPF calls for Multiple Dwelling Relief to be reinstated to stimulate investment in purpose built rental housing

Latest analysis from the British Property Federation (BPF) shows that the total number of purpose-built rental homes has reached more than 120,000, a 23% increase over the past 12 months. At the same time the analysis, carried out by Savills, shows that construction has contracted sharply, with the number of homes under construction down 20% year-on-year.

This drop in construction has been an ongoing trend in 2024, with the number of completions consistently outpacing the number of starts. This gap is continuing to widen, with 12,400 more homes completing in 2024 than starting. The slow down in construction is being seen more acutely in the regions, which dropped by 23% to 34,500 homes, than in London where numbers fell by 11% to 15,500 homes.

The number of BtR homes currently complete, under construction or in various stages of planning is over 273,700, with the sector growing 5% year-on-year. But while the sector pipeline remains robust with 103,000 homes in the planning system, including 54,500 homes with planning consent, the number of new applications coming forward has dropped by 12% in the last quarter.

The slow down in construction and new planning applications is a result of increased cost pressures (partly as a result of regulatory change) and points to a potentially longer-term supply challenge. The abolition of Multiple Dwellings Relief (MDR) in June, is already impacting the ability for schemes to progress due to viability challenges, and the BPF estimates that the number of homes foregone could be between 13,000 and 25,000.

The number of local authorities with BtR in their pipeline has increased to 212, meaning two-thirds (67%) of local authorities in the UK now have BtR being brought forward as part of housing delivery. BtR is an essential part of the housing market, especially in the context of the Government’s 1.5 million homes target, as it can delivered faster and is not dictated by sales rates.

Ian Fletcher, Director of Policy, British Property Federation, comments,

“Build-to-Rent has made a critical contribution to housing over the last 12 years with £40bn invested to date and 120,000 new homes built. The sector provides housing across the country for a wide range of people, especially since its diversification into low-rise homes for families. However, increased regulatory and other costs that have faced the sector for the last few years is starting to take its toll on new schemes, as evidenced through a drop in construction starts and new planning applications. Investors continue to be interested in Build-to-Rent for the UK market but we need to see policy that encourages schemes to progress and attracts the £250bn of further investment that is needed to meet demand.”

Guy Whittaker, Head of UK Build to Rent Research at Savills, said,

“The Build-to-Rent sector has become an increasingly important aspect of housing delivery. In the past year, a tenth of all new home completions came via Build-to-Rent developments, twice the contribution it made in 2019, five years earlier. But starting new sites remains a challenge and the reduction in the construction pipeline is reflective of wider development challenges facing all forms of housing delivery. Viability remains a hurdle in the current climate, with elevated debt and construction costs,  as does the planning system, particularly in London. If these obstacles can be navigated there is no shortage of investor demand to deliver new homes for rent, with more and more investors re-allocating capital from traditional investment sectors to Living sectors.”

Read the Build-to-Rent report for Q3 2024 here.