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Record investment in UK build to rent sector in first half of 2024

The UK’s build to rent (BTR) sector saw record investment levels in the first half of 2024, with over £2.6 billion invested, according to Knight Frank’s latest UK Build to Rent Market Update.

Single family housing leads the sector
Investment in BTR reached £1.3 billion in the second quarter of 2024, marking a 38% increase year-on-year. Single family housing (SFH) was a significant contributor, accounting for 56% of the total investment value in Q2. This surge was driven by Vistry’s £580 million sale of 1,750 single family homes to Blackstone-backed Leaf Living.

Lizzie Breckner, Head of Build to Rent Research at Knight Frank, stated, “The BTR sector is evolving rapidly, with single family housing emerging as a key growth area. Our analysis shows that by 2026, complete SFH supply will have more than doubled to just shy of 23,000 homes. This diversification within BTR is attracting a wider range of investors and meeting diverse tenant needs.”

Investment in new developments
The majority of Q2 deals, 94%, were directed towards funding the construction of nearly 4,000 new homes, amounting to over £1.2 billion in investment. In contrast, 6% of deals focused on purchasing operational assets, totalling nearly £80 million.

David Shapland, a Partner in the Residential Investment team at Knight Frank, commented, “The robust investment volumes we’ve seen in the first half of 2024 demonstrate the continued appeal of the build to rent sector. Despite strong economic headwinds, investment volumes have reached unprecedented levels, signalling strong investor confidence in the long-term potential of purpose-built rental accommodation.”

BTR sector growth and future outlook
Currently, there are 114,207 completed BTR homes in the UK in schemes with at least 75 units. Additionally, 62,030 homes are under construction and 84,607 have full planning permission, bringing the total sector size to 260,844 homes. Notably, over 11,000 new BTR homes have been completed this year, and if this pace continues, 2024 will be a record-breaking year for BTR delivery.

Breckner concluded, “Our recent Q2 findings highlight the sector’s increasing contribution to overall housing delivery, with BTR completions accounting for an estimated 9% of all new housing delivery so far this year, up from less than 1% a decade ago.”

The value of the UK’s professionally managed rental accommodation market has more than doubled since 2019, reaching an estimated £79 billion in 2024. With a strong development pipeline and the potential for further growth, this figure is expected to increase significantly by 2029.

Shapland added, “A robust development pipeline, coupled with an improving economic backdrop and the emergence of pro-development policies from the new Labour government, bodes well for the sector’s continued growth.”

This substantial investment and optimistic outlook for the BTR sector underline its crucial role in addressing the UK’s housing needs and attracting significant investor interest.