The Build to Rent (BTR) sector attracted £800m in investment during Q3 2024, according to Savills.
The Build to Rent Market Update revealed that single family housing (SFH) accounted for a record 50.4% of total investment.
The increase in investment was driven by both bulk and single site transactions, as investors aim to establish essential operational infrastructure.
Bulk deal investments reached £1.2bn for the year up to Q3 2024, making up half of the £2.4bn invested in the SFH sector.
Single site schemes also saw growth, rising from £0.27bn to £1.2bn.
House builders have restructured their business models and formed private rented sector (PRS) partnerships, emphasising long-term commitment to SFH.
This shift comes as sales rates, once supported by the Help to Buy scheme, may not return to previous levels.
Savills noted a shrinking construction pipeline, down 20% in the last year, along with signs of contraction in the wider PRS.
Savills observed that BTR investment would be essential to replace lost rental supply with high-quality, efficient homes.
The firm warned that local authorities must take a proactive approach to BTR delivery, as partnerships between investors and house builders are vital for future growth.
Guy Whittaker, head of UK BTR research at Savills, said: “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.”
