The UK’s Build to Rent (BtR) sector witnessed substantial investment in 2023, totalling £4.5bn, according to Savills’ latest report.
This figure is just shy of the record £4.6bn invested in 2022. Notably, Single Family Housing (SFH) captured a record 42% of the total investment, amounting to £1.9bn, a significant rise from 8% in the previous year.
Savills attributes this investment surge to the robust demand for rental homes, driven by factors such as high mortgage rates, a decline in buy-to-let properties, and the conclusion of the Help to Buy scheme.
The report highlights the necessity for the government to meet its annual housing target of 300,000 homes, with 60,000 of these needed in the private rental sector.
Guy Whittaker, head of UK Build to Rent Research at Savills, remarked on the sector’s resilience: “Despite the macro-economic challenges – elevated cost of debt and continued material and labour-cost inflation – the sector has proven resilient.
“The BtR market has seen continued growth due to the housing supply and demand imbalance and high levels of rental growth. This has led to inflation-matching returns while yields have proven comparatively strong.”
The report also celebrates the milestone of over 100,000 completed BtR homes in the UK, with another 53,800 under construction and a future pipeline of 112,800 homes, totalling 267,000 homes in the sector.
Whittaker is optimistic about the sector’s future, projecting growth to 360,000 homes by 2033, citing the potential for operational efficiencies and better data on portfolio performance.
Additionally, the planning pipeline has broadened beyond the North West, with emerging sites in the Midlands and South East indicating the sector’s evolution. Over the next five years, London and core cities are expected to account for 62% of completions, with London contributing 35,000 homes and core cities adding another 33,000 BtR homes.
