UK Build to Rent investment hits record high

UK Build to Rent has had an excellent year so far according to new research by Knight Frank. Continuing at this pace will be monumental for the sector.

Vistry Group's single-family Build to Rent homes acquired by Blackstone Real Estate and Regis Group | BTR News
Vistry Group's single-family Build to Rent homes acquired by Blackstone Real Estate and Regis Group.

Investment into the UK’s Build to Rent sector topped £1.3bn in Q2 2024, up 38% year-on-year according to global property consultancy Knight Frank’s latest UK Build to Rent Market Update.

This brings the total investment for H1 2024 to just over £2.6bn, surpassing the previous half-year high of £2.3bn in 2021.

Knight Frank found that most of the deals made in Q2 (94%) were to fund the construction of nearly 4,000 new Build to Rent homes, totalling over £1.2bn worth of investment. This compares to 6% of deals for the purchase of operational assets totalling nearly £80m.

Single-family housing (SFH) continues to lead the sector. It represents 56% of total investment by value in the second quarter of the year – largely based on Vistry’s £580m sale of 1,750 single-family homes to Blackstone and Regis Group, which will see Leaf Living manage the homes.

“The Build to Rent sector is evolving rapidly, with SFH emerging as a key growth area. Our analysis shows that by 2026, complete SFH supply will have more than doubled to just shy of 23,000 homes. This diversification within Build to Rent is attracting a wider range of investors and meeting diverse tenant needs.

“Our recent Q2 findings highlight the sector’s increasing contribution to overall housing delivery, with Build to Rent completions accounting for an estimated 9% of all new housing delivery so far this year, up from less than 1% a decade ago.”

Lizzie Breckner, Head of Build to Rent Research, Knight Frank

There are currently 114,207 completed Build to Rent homes across the UK in schemes with at least 75 units. A further 62,030 are under construction and 84,607 have full planning permission granted, taking the total size of the sector to 260,844 homes.

Alongside this, over 11,000 new Build to Rent homes have reached completion so far this year. In H2 2024, if this momentum continues, it will be a record-breaking year for Build to Rent delivery.

Knight Frank has also said that the value of the sector has more than doubled since 2019, reaching an estimated £79bn in 2024. In terms of the future development pipeline, this figure has the potential to rise significantly by 2029.

“The robust investment volumes we’ve seen in the first half of 2024 demonstrate the continued appeal of the Build to Rent sector. 

“Despite strong economic headwinds, investment volumes have reached unprecedented levels, signalling strong investor confidence in the long-term potential of purpose-built rental accommodation.

“A robust development pipeline, coupled with an improving economic backdrop and the emergence of pro-development polices from the new Labour government bodes well for the sector’s continued growth.”

David Shapland, a Partner in Residential Investment team, Knight Frank