Build-to-Rent Continues to Grow in UK Property Market

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Build-to-Rent Now Accounts for 2% of Privately Rented Properties

According to a recent analysis conducted by Foxtons, the build-to-rent sector is experiencing significant growth. The study reveals that build-to-rent homes now make up almost 2% of all privately rented properties, reaching 4.2% in London. This marks the highest market share since 2018.

With the housing supply still low in the UK rental market, it’s good to see the build-to-rent sector thriving as developers and landlords look to bring new homes to tenants across the country.

Let’s look at the Foxtons research in more detail and what it means for buying investment property in the UK.

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How Much Is Build-to-Rent Growing in the UK Property Market?

Foxtons examined annual build-to-tent completions, considering the total market stock since 2018, to understand the sector’s proportion in the overall Private Rented Sector (PRS) and its evolving market share.

In 2018, build-to-rent completions amounted to 31,409, constituting only 0.6% of the 5.5 million privately rented homes in the lettings sector. However, the industry has consistently grown yearly, reaching 58,844 units in 2020, surpassing 1% of the total private rental market for the first time.

By 2023, the number of build-to-rent units rose to 100,372, indicating a remarkable 69% increase since 2013. In comparison, the total PRS stock increased by only 3% during the same period. Currently, the build-to-rent sector is estimated to represent 1.8% of the entire private rental market stock, marking the highest proportion since 2018.

The growth is even more pronounced in the London market. In 2018, build-to-rent completions comprised only 1.8% of the capital’s total PRS stock. However, consistent annual growth has led to a substantial increase. Foxtons’ analysis reveals that build-to-rent homes now constitute 4.2% of London’s PRS stock, with completions rising by 61% since 2018.

Discover More: If you’re looking for more property market information, see our guides on property investments with high returns and whether property is still a good investment.

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How Did Foxtons Experts React to the Latest Build-to-Rent Data?

Sarah Tonkinson, Managing Director of Foxtons Institutional PRS and Build-to-Rent, commented:

“We’ve seen phenomenal growth across the build-to-rent sector in recent years, particularly within the London market and, as a result, build-to-rent completions now account for their highest proportion of total PRS stock. However, it’s fair to say that the sector still remains in its relative infancy and so the potential for further growth is vast.

“With a move towards longer-term renting until later in life, tenants expect more both with respect to the quality of rental accommodation available and the security and certainty that long tenancy agreements provide them. With the build-to-rent sector offering this and more, we only anticipate demand to increase and for stock levels to follow suit in order to satisfy the evolving needs of renters.”

This research from Foxtons follows the most recent Savills English Housing Supply Update, which also showed that build-to-rent completions surpassed 100,000 units in 2023. This marked a 57% increase compared to 2022. A substantial number of developments in the current pipeline also mean that the market should see more growth moving forward.

In addition, Knight Frank reported that investors had committed £4.6bn to the UK build-to-rent market in 2023, emphasising investor confidence in build-to-rent properties as part of their property investment strategy. It also indicates an urgency to enter the UK BTL investment market following extensive rental growth due to supply issues.

Take a look at some of our recent buy-to-let area guides for more on the UK property market:

Author

Dale Barham

Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.