INTERNATIONALNationalReal Estate News

Build-to-Rent faces global challenges

The Build-to-Rent (BtR) sector in both the UK and Australia is playing an increasingly crucial role in addressing housing shortages.

In the UK, the total number of completed BtR homes has reached over 120,000, with a 23% increase in the past year and by the end of 2024, Australia is expected to have 15,400 BtR units completed, with an additional 8,400 under construction.

The latest analysis from the British Property Federation (BPF), carried out by Savills found that despite this significant growth, the future supply of BtR homes is under threat, as construction in the sector has sharply declined, falling by 20% year-on-year.

This slowdown in construction has been a notable trend throughout 2024, with the number of completed homes consistently outpacing new starts.

The situation is particularly pronounced outside of London, where construction activity dropped by 23% to 34,500 homes, compared to an 11% drop in the capital, where 15,500 homes are currently being built.

The total number of BtR homes either completed, under construction, or in various stages of planning now stands at over 273,700, representing a 5% year-on-year increase.

While there are 103,000 homes in the planning system, including 54,500 with planning consent, the number of new planning applications has fallen by 12% in the last quarter, further compounding concerns about the future supply of BtR homes.

Ian Fletcher, Director of Policy at the BPF, emphasised the importance of BtR in addressing the UK’s housing challenges.

“Build-to-Rent has made a critical contribution to housing over the last 12 years, with £40billion invested to date and 120,000 new homes built.

The sector provides housing across the country for a wide range of people, especially since its diversification into low-rise homes for families.”

However, Fletcher warned that the sector is facing significant issues:

“Increased regulatory and other costs that have faced the sector for the last few years are starting to take their toll on new schemes, as evidenced through a drop in construction starts and new planning applications.

Investors continue to be interested in Build-to-Rent for the UK market, but we need to see policy that encourages schemes to progress and attracts the £250bn of further investment that is needed to meet demand.”

Savills’ Head of UK Build to Rent Research, Guy Whittaker, echoed these concerns, noting the growing importance of BtR to the UK housing market.

“The Build-to-Rent sector has become an increasingly important aspect of housing delivery.

In the past year, a tenth of all new home completions came via Build-to-Rent developments, twice the contribution it made in 2019, five years earlier.”

Show More

Catherine Nikas-Boulos

Catherine Nikas-Boulos is the Digital Editor at Elite Agent and has spent the last 20 years covering (and coveting) real estate around the country.