Build To Rent completions improve but starts plummet

The number of completed Build-to-Rent homes in the UK has increased 13 per cent in the past year to 88,100 units despite market conditions slowing development activity, according to new analysis by the British Property Federation.

The research, undertaken in partnership with Savills, shows the total number of Build-to-Rent homes completed, under construction or in the planning pipeline stands at 253,402, up 12 per cent in the past 12 months. 

Single Family Housing continues to expand strongly with 28,000 units completed or in the pipeline, making up 12 per cent of the Build-to-Rent sector. 

The number of homes under construction increased by nine per cent, buoyed by major house builders agreeing forward funding transactions with investors comprising over 2,000 homes for rent. Meanwhile, the number of new Build to Rent homes in the design and planning phase increased 13 per cent to 111,815.

However, build cost inflation and wider economic uncertainty looks set to slowdown delivery with construction starts totalling 5,549 units in the first half of the year, down 55 per cent on the same period in 2022. 

In London, where high land values mean schemes are typically larger and more capital intensive, construction starts totalled just 836 units, down 80 per cent year-on-year from 4,415 in H1 2022.

BPF policy director Ian Fletcher says: “Build to Rent is continuing to expand but the sector is not immune to the current economic uncertainty and cost inflation. At the current time it is very challenging to deliver large-scale capital intensive schemes, particularly in London, but there are fewer obstacles to the delivery of smaller developments in regional cities and single-family housing both which continue to grow as a proportion of housing supply in UK cities.”  

And Jacqui Daly - Savills’ director of residential research and consultancy - adds: “With interest rates now expected to stay higher for longer demand for new homes for sale is likely to be weaker which will constrain housing delivery. Build to Rent will have a key role to play in maintaining overall housing supply, and in the last quarter we have seen examples of major house builders agreeing to deliver a pipeline of rented homes, which has boosted the pipeline. The continued diversification of the profile of BtR deliverers is critical to its continued growth.”