UK Build to Rent investment hits record high &#8211; London Wallet

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Investment into the UK’s build to rent (BTR) sector topped £1.3bn in the second quarter of 2024, up 38% year-on-year, Knight Frank’s latest UK Build to Rent Market Update has revealed.

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

The firm highlights that single family housing (SFH) continues to lead the sector, representing 56% of total investment by value in Q2. This was largely accounted for by Vistry’s £580 million sale of 1,750 single family homes to Blackstone-backed operator Leaf Living.

Lizzie Breckner, head of BTR research at Knight Frank, stated: “The BTR sector is evolving rapidly, with single family housing 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 BTR is attracting a wider range of investors and meeting diverse tenant needs.”

The majority of deals in Q2 (94%) were to fund the construction of nearly 4,000 new homes, totalling over £1.2bn worth of investment. This compares to 6% of deals for the purchase of operational assets totalling nearly £80m.

David Shapland, a partner in residential investment team at Knight Frank, commented: “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.”

There are currently 114,207 completed BTR 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. Notably, more than 11,000 new BTR homes have been completed so far this year. Should delivery continue at this pace for the second half it will be a record-breaking year for BTR delivery.

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

Knight Frank has said the value of the UK’s professionally managed rental accommodation market has more than doubled since 2019, reaching an estimated £79 billion in 2024. Looking at the pipeline of future development, this figure has the potential to increase significantly by 2029.

Shapland added: “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.”