A record £5.1bn was invested in the UK Build to Rent (BTR) sector in 2024, with more than half of this total committed in the final quarter, according to Savills.
The firm’s latest UK Build to Rent Market Update reveals that investment in 2024 was 6% higher than the previous record set in 2022. BTR accounted for 13% of total UK real estate investment in 2024, up from just 5% in 2021, as a wide range of global investors increasingly allocate capital to the Living sectors.
Savills notes that activity was supported by a resurgence in investment from outside the UK: having fallen to 42% of total investment in 2023, the lowest proportion since 2018, cross border investment rebounded to 51% in 2024 and 56% across Q3 and Q4, signalling renewed confidence in UK BTR. North American investors were particularly active, deploying over £1 billion in Q4 alone.
Single Family Housing (SFH) also broke records, with £2.5 billion deployed. Established players including Lloyds Living, Sigma Capital and Leaf Living meaningfully expanded their portfolios in 2024, alongside the emergence of new capital such as Greykite and Kennedy Wilson. Savills predicts that more investors will pursue opportunities across both houses and apartments in 2025 as part of a diversified UK residential investment strategy.
The report notes that there are now 123,500 completed Build to Rent (BTR) homes in the UK, with 49,000 under construction and an additional pipeline of 109,800 homes. In total, the sector comprises 282,500 homes either completed or in the pipeline.
Q4 data shows a 17% increase in operational stock over the last 12 months, despite an 18% drop in new starts due to cost pressures. However, planning permissions have risen by 28% year-on-year, and with easing debt costs, there is optimism for new starts in 2025.
London and Birmingham saw the most BTR homes consented in 2024, while Ealing and Croydon led the way in London, with 2,000 and 1,200 new consents, respectively.
Guy Whittaker, head of UK Build to Rent research, said: “Build to Rent is set for another strong year in 2025 and it continues to play a crucial role in UK housing delivery, supporting regeneration and unlocking development.
“With the private rented sector making up a fifth of households in England, meeting the UK government’s target of 300,000 new homes annually will require a significant contribution from BTR. To deliver a fifth of new supply for private rent by 2030, there is a need for 60,000 new build rented homes each year, which will continue to drive investment in and growth of the sector.”
Charlie Bottomley, director, Savills Capital Advisors, added: “There is intense competition from lenders to deploy capital into the BTR sector and, as a result, we are seeing lower margins along with an increasing number of banks now offering up to 65% LTC for development finance.
“Meanwhile, non-bank lenders are offering 70% LTC or higher with margins as low a SONIA +350bps in order to remain competitive. Greater competition has also led to more borrower-friendly structures, including Pari-Passu drawdown profiles becoming standard and a fast route to interest rate margin step downs upon practical completion and stabilisation.”
Read the orginal article: https://propertyindustryeye.com/uk-build-to-rent-poised-for-further-growth-in-2025/
