Build-to-rent opens

The build-to-rent (BTR) sector has matured rapidly over the past decade, from a novel investment idea to a major component of the UK’s housing market.

For property developers, particularly those navigating the challenges of planning, construction and financing, BTR can present a significant opportunity, albeit one that comes with its own unique pressures and complexities.

BTR emerged into prominence following the London 2012 Olympics and the repurposing of the Olympic Village. The sector has grown from a standing start to, according to Knight Frank, more than 295,000 units nationwide. BTR undoubtedly forms part of the government’s ambition to deliver 1.5 million homes by 2030 addressing the UK’s chronic housing shortage.

The UK’s largest urban centres remain the heart of BTR activity, with 84% of developments concentrated in London, Manchester, Birmingham, Liverpool and Leeds. In London, where central space is limited, BTR schemes are often focused around transport hubs and regeneration zones, reflecting the ongoing demand from young professionals for well-connected, amenity-rich rental homes.

The strength of the BTR model lies in its long-term rental income and relative stability, especially in a market where house price growth is slowing and inflation has eaten into traditional returns. Institutional investment, particularly from pension funds is increasing, with investors drawn to the predictability of long-term rental yields.

However, developers must contend with several financial pressures.

Rising land values, increasing construction costs and static wages have narrowed profit margins. As a result, a growing number of traditional housebuilders are pivoting from open-market sales towards BTR schemes, often backed by private equity or institutional funds. The emphasis now is on maximising rent per square foot while ensuring that schemes remain viable amid planning uncertainty and shifting government requirements.

One of the major barriers to BTR development remains the UK’s planning system. Developers face delays and a lack of clarity, often with inconsistent local planning decisions. Until the planning system is made more rules-based and predictable, investment appetite from risk-averse institutional backers will likely remain cautious.

Affordable housing requirements are another sticking point. While policy aims to ensure access to affordable homes, rigid targets can make BTR schemes financially unviable, particularly where land and build costs are already high. Developers argue that a more flexible approach is needed,  one that reflects the practicalities of site viability and the broader role BTR plays in plugging the gap between social housing and ownership.

Culturally, the UK has long been a nation of homeowners but affordability constraints are pushing a generational shift. Today, it takes an income of around £50,000 and a substantial deposit to get on the housing ladder. Social rents remain restricted to those on lower incomes, although shared ownership tenures provided through social housing and private developers can offer an alternative. For the growing number of people, BTR provides high-quality, low-maintenance and flexible homes that suit modern urban lifestyles and bridges the gap between social housing and home ownership.

A strategic opportunity

For many developers, BTR is no longer a fringe activity but a strategic pillar of urban development. As the sector matures, the focus must remain on balancing investor returns with long-term viability and social need. With demand continuing to outpace supply, those who can navigate the regulatory, planning, and investment challenges stand to benefit – even more so if government policy becomes more supportive and pragmatic.

BTR may not solve all of the UK’s housing problems, but it is one of the few sectors with the potential to scale quickly and sustainably. For developers and their advisers, it’s a space well worth watching – and investing in.

We are uniquely positioned to support developers and investors navigating the evolving Build to Rent landscape. From strategic financial appraisals and tax-efficient structuring to land development, our team delivers bespoke solutions that balance commercial success with long-term sustainability.

If you’re exploring opportunities in BTR, get in touch to see how our real estate specialists can help you unlock value and drive growth.  Contact our Real Estate team today to start the conversation.