Knight Frank has released its Single Family Housing (SFH) 2025 report, revealing that last year saw a record 31 SFH deals complete nationwide, up 24% year-on-year and more than double the level in 2022. The sector has experienced extraordinary growth, and its remarkable expansion is evident in its share of total Build to Rent (BTR) deal volumes, which has surged from just 2% in 2020 to 43% in 2024.
According to Knight Frank, investment into SFH reached £1.8bn last year, taking the total to more than £4.4bn invested since 2020. Due to this significant influx of capital, SFH is now being developed in 132 local authorities across the UK, with a growing body of evidence demonstrating the sector’s ability to deliver in diverse markets nationwide.
The current UK pipeline includes 14,353 complete and operational SFH homes across 212 schemes, with a further 11,262 units under construction. In 2024 alone, more than 3,000 SFH homes were completed.
The firm notes that the substantial surge in both investment and development over the last two years from a standing start demonstrates the pivotal role institutional investment into SFH can play in addressing the UK’s housing supply challenges.
Jack Hutchinson, a partner in the residential investments team at Knight Frank, said: “The size of the opportunity within single family housing is immense. With 3.1 million renters already living in suburban households across the UK, and just 0.2% of current privately rented homes operated by institutional investors, we’re only scratching the surface.
“Our projections suggest the market could absorb more than 1 million SFH homes at full maturity. Given the size of the demand pool, we expect SFH delivery to eventually overtake multifamily as the market continues to evolve.”
In 2024, 48% of SFH transactions were forward commitments, up from 24% in 2023 and equal to the number of forward funds agreed over the year. Just 3% of deals were for stabilised portfolios.
Last year 71% of total spend was targeted at the South East and East of England, up from nothing in 2021.
Oliver Knight, head of residential development research at Knight Frank, added: “There is a significant supply shortfall in the rental market, with the number of houses available to rent at the end of 2024 around 30% lower than pre-pandemic. SFH can help to replace some of these homes being lost from the rental market, though current rates of delivery aren’t making a dent. For investors and operators that has meant a period of above average rental growth, as well as strong occupancy and lease up in existing and new schemes.”
Data from the National Residential Landlord’s Association suggests that 46% of landlords intend to sell properties within the next 12 months, up from 31% at the beginning of last year.
Knight continued: “Partnerships have emerged as the main route to market for SFH investors to achieve scale quickly, and with over one million private plots on more than 9,000 housing-led sites currently under construction or in planning across England, there is huge potential to unlock SFH supply just from sites which are already in the planning pipeline.”
According to the firm’s survey of 50 volume and SME housebuilders, 60% said they had already sold units to multifamily or SFH investors.
Hutchinson concluded: “This presents a strategic opportunity for institutional investors to take a leading role in housing delivery, as housebuilders increasingly adopt multi-tenure approaches across their portfolios.”
The report identifies growing international investor appetite, with £1.06 million of cross-border capital invested in SFH in 2024 alone – a 45% year-on-year increase. Knight Frank’s survey of nearly 60 major investors across UK Living Sectors found that 71% plan to target SFH over the next five years, up significantly from 41% currently invested.
Lisa Attenborough, head of Knight Frank Capital Advisory, noted: “Interest rates have stabilised although they remain stubbornly high. That said, we are seeing peak liquidity in the debt market, which is driving down margins, resulting in a lower all-in cost of debt.
“There is significant appetite to invest into SFH from global capital – this appetite is matched from the debt market – so much so, that looking ahead, we anticipate innovative funding structures to emerge that better align with investor requirements and maximise returns.”
Read the orginal article: https://propertyindustryeye.com/sfh-can-help-boost-housing-supply-in-the-face-of-ambitious-housing-targets/
