The UK’s Build-to-Rent (BTR) sector is poised to attract a record-breaking £6bn in investment in 2025, according to “Built to Last”, the new BTR market report by Lambert Smith Hampton (LSH).
This surge in activity comes despite ongoing economic and geopolitical headwinds, reflecting the sector’s growing resilience, diversification, and appeal to institutional investors.
The number of operational BTR units has more than doubled in the past four years, surpassing 130,000 in Q1 2025. The pipeline remains robust, with over 56,500 units currently under construction and a further 126,000 in planning.
A key driver of this momentum is the continued expansion and diversification of the sector. The rise of single-family rental (SFR) and co-living schemes has broadened the appeal of BTR beyond its traditional base of young, urban renters. These emerging sub-sectors are helping the market mature and meet the evolving needs of renters across the UK.
While London and Greater Manchester continue to account for two-thirds of existing BTR stock, regional markets are taking centre stage. Nearly 60% of units under construction are located outside these historic strongholds, underscoring the depth of activity across the UK.
Birmingham leads this regional surge, now recognised as the fastest-growing BTR market outside London. Over 16,000 units are either under construction or have received planning consent, with stock in the city increasing by 29% in 2024. Notable developments opened last year include Moda’s Loudon’s Yard (398 units) and Cortland’s Broad Street (440 units).
Co-living is also gaining traction across the UK. Now accounting for 15% of the development pipeline, the model is extending beyond the capital. Regional cities now host 40% of operational co-living beds, driven by landmark openings in Manchester, with nearly half (46%) of all consented and under-construction co-living schemes located outside London.
The SFR sector also continues to outperform, with £1.9 billion invested in both 2023 and 2024, more than eight times the five-year average. While SFR currently comprises just 10% of operational BTR stock, it attracted 38% of total investment in 2023–24. This figure is expected to remain elevated, as expanding investment platforms acquire more units for their SFR portfolios.
The trading of stabilised multifamily assets has become a significant feature of the market. In Q1 2025 alone, BTR investment reached £1.1 billion, following a record £5.2 billion in 2024. Stabilised assets represented 48% of Q1 multifamily investment volume, a sharp rise from 27% in 2024 and well above the five-year average of 15%.
Major transactions included Ridgeback’s £126 million acquisition of Equipment Works in Walthamstow and the joint purchase of Birmingham’s Allegro by QuadReal and Realstar for approximately £115m.
As far as the rental sector is concerned, rental growth is expected to rebound in 2025 after a cooling in 2024, with rents forecast to rise 4.5% by year-end and sustain a long-term average of 4% annually. These projections, provided by Hamptons, reflect continued undersupply and expected impacts from legislative changes, including the forthcoming Renters’ Rights Bill.
Simon Wilson, senior director and Head of LSH Living and Capital Markets, said: “2025 is set to mark another milestone year for the UK BTR sector. Amid wider economic uncertainty, the sector is evolving into a mature and diversified investment class, with rising activity outside of London, continued demand for SFR, and increased trading of stabilised multifamily assets.
“As many of the assets developed over the past decade begin to change hands, we expect a sustained trend towards forward purchases and operational transactions, underpinned by the strength of institutional capital and a maturing market landscape.”
Reflecting on the report, Willie Robertson, contracts manager at HiiLIFE, commented: “Investment in the build-to-rent and purpose-built student accommodation sectors is projected to hit new records in 2025. After a period of hesitation driven by construction costs, labour shortages, and planning delays, the current momentum suggests a renewed confidence from the construction industry in the BTR sector.
“There are several factors behind this trend. Renting is no longer seen as a temporary solution or a fallback. For many, especially younger generations, it is a deliberate lifestyle choice that offers flexibility and freedom without the long-term financial burden of home ownership. Prospective homeowners face many barriers that prevent them from getting on the property ladder, including high mortgage rates and the lack of affordable options on the market. As a result, the demand for high-quality rental homes is growing.
“To meet this demand, developers have increased their investment in the BTR market, fuelling further competition for them to deliver products of the highest quality. Many now focus on delivering well-designed, modern homes that offer a high-quality lifestyle through luxury amenities, including home cinema rooms, gyms, co-working spaces, and roof-top terraces which are now common expectations rather than added extras. Residents want convenience and quality, and the best developments combine both while establishing a sense of community and long-term liveability.
“We are also seeing a shift beyond London, with a significant increase in BTR projects underway in cities such as Manchester, Birmingham, Leeds, and Glasgow. These regions offer great potential for scaling up development and are becoming key hubs for premium rental schemes.
“At HiiLIFE, we are working with developers across the UK that are increasingly looking for complete solutions. Our one-stop approach, delivered in partnership with Samsung, allows BTR schemes to integrate everything from one supplier, including AV, HVAC systems, domestic appliances, and smart amenities. Developers want simplicity, reliability and consistency, and that’s what we bring to the table.
“The uplift in investment demonstrates how the BTR sector is evolving fast and maturing well. With the right blend of quality, technology and long-term thinking, the opportunity to deliver exceptional rental living is only just beginning.”
Read the orginal article: https://propertyindustryeye.com/uk-btr-sector-to-hit-6bn-investment-in-2025/
