Abolition of the MDR has influenced capital values, CBRE find

CBRE highlight that rental values for multifamily properties have risen while capital values have decreased.

CBRE has released its latest UK Multifamily Index | BTR News
CBRE has released its latest UK Multifamily Index.


Property consultancy CBRE has released insights from its latest UK Multifamily Index, which found that multifamily properties in the UK saw rental values grow by 7.7% in the year to March 2024. Gross rental income also grew by 5.3% over the same period.

Despite strong performance in terms of income, UK multifamily properties saw capitalisation rates move out by 38 basis points in the last twelve months. This contributed to a fall in capital values of 3.2% over the year. The fall was smaller than that seen in the office and retail sectors over the same period.

“The decline in capital values for multifamily assets reflects how capital market conditions have been challenging for real estate investment across the board. The index results demonstrate how the sector’s strong fundamentals continue to support income growth, so it’s not surprising that the Living sectors received the most investment over the last twelve months, which we saw in our latest UK real estate investment figures. The results also illustrate the impact, as we have previously reported, of the abolition of the Multiple Dwelling Relief (MDR). The market took this into account immediately, wiping up to 4% from investment values and significantly reducing the capacity for those impacted to deliver much needed, good quality homes.”

Jason Hardman, Executive Director, Residential Valuation & Advisory Services, CBRE

According to the CBRE UK Monthly Index, retail capital values fell by 4.5% in the year to March 2024 while office capital values fell by 11.6%. A significant influence on capital values as at 31 March 2024 is the abolition of the MDR announced in the latest Budget.

Rental value growth for the year to March 2024 was strong both for multifamily assets in London, at 7.7%, and for multifamily assets located elsewhere in the UK at 7.8%.

However, capital value growth diverged as London assets saw a larger upward movement in capitalisation rates. Capital values declined by 6.3% for London assets in the year to March 2024, compared to a decline of only 0.7% for assets in the rest of the UK, according to CBRE.


“The third edition of our UK Multifamily Index will help investors to compare the performance of this maturing sector with other investment property types. What stands out is that multifamily offers strong rental growth for assets in London and across the UK’s key regional centres, particularly when compared to the traditional sectors like industrial, office and retail.”

Jennet Siebrits, Head of UK Research, CBRE