The UK residential Build-to-Rent (BTR) sector has emerged as a key solution to one of the country’s most persistent challenges: the housing crisis. Once a niche idea, the BTR model has grown into a resilient investment opportunity, attracting billions in capital from global investors. But the question remains, why now? And why the UK?
For decades, the UK’s housing market revolved around the dream of buying a home, with renting often viewed as a temporary or less desirable option. This narrative is changing. Rising property prices, economic uncertainty, and shifting lifestyle preferences have come together to transform how people view renting.
Build-to-Rent – large-scale, purpose-built developments designed specifically for renters – are not traditional rental properties, but carefully planned communities offering modern living, flexible tenancies, and professional management.
Patrick Ryan, Director at Squire Patton Boggs, explained during a recent webinar that in terms of rental performance and returns, BTR has held up well and continued to grow even during recent challenging years.
In the webinar, hosted by Squire Patton Boggs and international real estate consultancy Knight Frank, industry experts delved into the reason why the BTR sector has defied constant market turbulence and where it is going next. With macroeconomic drivers, growing interest, and more on the table, the session was illuminating for anyone who wants to know what makes Build-to-Rent the investment opportunity of today and tomorrow.
UK Real Estate Market Overview
Whatever can be said about the future of the real estate market, it’s essential to first look back. Between 2021 and 2023, there have been significant challenges here. First, the obvious global issues such as COVID-19, inflationary pressures, and the Ukraine war were compounded by more UK-specific challenges like Brexit, as well as financial turmoil following successive government budgets.
Despite this, the webinar pointed out that UK real estate remains a “safe asset class” for investors. The election of a new government in July, with its focus on addressing the UK’s housing shortage, has boosted optimism somewhat, too.
Of all market segments, the Build-to-Rent sector in particular has continued its growth trajectory.
It was noted that in terms of rental performance and returns, it has held up well. This trend reflects shifting market dynamics, including rising housing shortages and increasing unaffordability for first-time buyers.
The Trends Driving Build-to-Rent Investment
Research by Knight Frank, presented in the Squire Patton Boggs webinar
Oliver Knight, Partner at Knight Frank, provided a detailed analysis of the BTR sector’s resilience and growth. Since 2016, around £34 billion has been invested in acquiring or funding BTR assets in the UK.
Notably, the last four years saw record-breaking investment levels, culminating in £4.6 billion in 2023.
As of Q3 in 2024, investment momentum has looked pretty strong, with £3.2 billion spent—a figure ahead of 2023 levels at the same point.
Oliver Knight highlighted the diversity of capital flowing into the BTR market. More than half of all investment comes from overseas, led by North America and Europe, with increasing contributions from Asia-Pacific. About 20% of recent investment has come from new entrants, including investors shifting focus from other asset classes.
Why Build-to-Rent is Thriving
The UK rental market remains under significant pressure due to a supply-demand imbalance. According to Knight Frank, rental property listings have fallen dramatically—from 260,000 per month in 2017 to just 150,000 in recent months.
What’s Driving This Supply Crunch? Tenants are staying in rental properties longer. Private buy-to-let landlords are exiting the market due to tax changes and increasing regulation. |
The upcoming Renters’ Reform Bill and minimum energy efficiency standards (effective by 2030) are expected to push even more private landlords out of the market. Knight explained that while this adds pressure to the overall rental market, it further strengthens the opportunity for professionally managed BTR developments.
Rental Growth and Supply Pipeline
Rental prices have surged due to tight supply. While recent figures represent a stabilisation from the double-digit increases seen post-pandemic, rents are expected to grow in line with earnings moving forward.
The BTR sector has also seen an expansion in supply:
- 122,000+ BTR units are now operational.
- ~160,000 units are in the development pipeline.
Currently, BTR accounts for around 10% of all new housing delivery in the UK—a significant leap from less than 1% a decade ago. Yet still, Knight Frank estimates the sector has plenty of growth potential. At full maturity, BTR could comprise 30-35% of the private rental market, requiring a jump to 1.7 million homes based on today’s population.
Final Thoughts
As the BTR sector matures, protecting and maximising the investment becomes increasingly critical. Effective property management is key, and this starts with robust digital record-keeping systems. Adopting technology-driven platforms allows investors and managers to track occupancy, maintenance schedules, and rental performance in real time.
Regular inspections and proactive maintenance are equally important to ensure properties remain attractive and compliant with evolving regulations, such as minimum energy efficiency standards. Inspections not only help identify small issues before they escalate but also improve tenant satisfaction, leading to lower turnover and void rates.
Put simply, data-driven insights guide strategic decisions, such as optimising rents, reducing operating costs, or identifying opportunities for refurbishment, and a digital audit trail helps keep everything on course.
With a blend of smart investment decisions, the adoption of technology, proactive management, and regular inspections, BTR investors can protect their assets, enhance the operational efficiency when it comes to managing their portfolio, with the upshot of long-term returns in a healthy market.
In a growing sector that will become more and more competitive, only well-maintained and efficiently managed properties will stand out as the most profitable investments, so secure your BTR assets with Property Inspect today.
Watch the webinar here: https://www.youtube.com/watch?v=QszGaSXxVno&ab_channel=SquirePattonBoggs
