The UK Build to Rent sector saw robust growth in Q3 2024, attracting £800m in investment, claims Savills.
Single Family Housing (SFH) led the way, representing a record 50.4% of total investment.
Savills notes that the surge in investment is being fuelled by both bulk and single site transactions, as investors seek scale to establish essential operational infrastructure. Bulk deal investments reached £1.2 billion in the year to Q3 2024, representing half of the £2.4 billion invested in the SFH sector. Single site schemes also saw significant growth, rising from £0.27 billion to £1.2 billion.
With slowing sales rates to homeowners and Buy to Let investors, institutions appear to be seizing the opportunity to enter the market.
House builders have restructured their business models and formed Private Rented Sector (PRS) partnerships, demonstrating long term commitment to SFH. This shift acknowledges that sales rates, once bolstered by the Help to Buy scheme, may not return to previous levels.
A shrinking construction pipeline, down by 20% in the last year, coupled with signs of contraction in the wider private rented sector, highlights the urgent need for continued investment with Savills observing BTR investment is essential to replace lost rental supply with high-quality, efficient homes. Local Authorities must take a proactive approach to BTR delivery, as partnerships between investors and housebuilders are crucial for future growth.
Guy Whittaker, Head of UK BTR Research, Savills, comments: “The rapid growth of single site transactions alongside bulk deals shows that the recent rise in investment is a longer-term trend, rather than just a reaction to a softer sales market. Viability remains a hurdle in the current climate, with elevated debt and construction costs, as does the planning system, particularly in London. If these obstacles can be navigated, there is no shortage of investor demand to deliver new homes for rent, with more and more investors reallocating capital from other commercial real estate sectors into living.”
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