Property consultancy firm Knight Frank launches its latest Build to Rent market update for Q3 2023, focusing on key investment themes in the sector. Although investment volumes have slowed following a strong start to the year, for the first nine months in 2023, activity is ahead of the historic average.
According to Knight Frank, across the UK, there are currently 90,000 completed Build to Rent homes in schemes with at least 75 units. An additional 67,000 are under construction and 74,000 have full planning permission granted. This takes the total size of the sector to 231,000 homes.
The single-family rental (SFR) market also continues to expand. There are currently 9,800 homes complete, 6,500 under construction and 4,400 with planning granted. This takes the total size to 20,700 SFR homes.
Knight Frank reports that Q3 2023 saw £698m transact in UK Build to Rent – taking year-to-date investment to £2.7bn. And although investors continue to seek exposure to the sector, increased cost of debt continues to put pressure on deal structuring – particularly in forward funding.
With the continued supply-demand imbalance in the rental sector, annual rental growth for new Build to Rent lets was 8.4% in September, compared to 5.7% for the wider private rental sector (PRS). This highlights an urgent need for new supply, and presents a key opportunity for the expansion of the Build to Rent sector.