UK Build to Rent (BTR) investment surged to £800 mln (€955 mln) in Q3 2024, a significant increase from the same period in 2023, according to Savills.
Single-family housing (SFH) dominated investment, accounting for a record 50.4% of the total.
This significant growth is driven by both large-scale portfolio acquisitions and individual site investments, as investors aim to establish efficient operations and scale.
Large-scale portfolio deals totaled £1.2 bn (€1.4 bn) in the year to Q3 2024, accounting for half of the £2.4 bn (€2.9 bn) invested in the SFH sector. Individual site investments also saw substantial growth, increasing from £0.27 bn (€0.32 bn) to £1.2 bn (€1.4 bn).
As housing market conditions change, institutions are stepping in to fill the gap left by slowing sales to individual buyers and landlords. Housebuilders are adapting by forming private rented sector partnerships, signaling a long-term commitment to the SFH sector.
A 20% decline in construction activity, coupled with a weakening private rented sector, underscores the urgent need for BTR investment. Savills emphasizes the importance of BTR in replacing lost rental supply with high-quality homes. To drive future growth, local authorities must actively support partnerships between investors and housebuilders.
Guy Whittaker, head of UK BTR Research, Savills, commented: ‘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.’
