The proportion of households in the Build to Rent sector has climbed to nearly 20%, with forecasts suggesting this could hit 30% by 2030. The shift is most prominent in younger demographics and middle-income earners who prioritise flexibility, modern amenities, and urban living.
The Build to Rent sector in England has undergone a remarkable transformation over the past decade. Emerging from nascent stages in the early 2010s, the market has been strategically shaped by pivotal policy interventions.
The 2013 Montague Review, commissioned by the UK government, was a watershed moment, explicitly recommending fiscal and planning incentives to encourage institutional investment in purpose-built rental housing.
Subsequently, the 2016 Housing and Planning Act introduced critical planning reforms that simplified development processes for Build to Rent schemes, signalling a fundamental policy shift.
Local authority planning frameworks began to recognise Build to Rent as a distinct and valuable residential asset class, providing dedicated planning policies that differentiated it from traditional residential development models, though not uniformly across the country, and Build to Rent developers will argue strongly there is a very long way to go for planning policies to be fit for purpose with respect to understanding the Build to Rent product.
Nevertheless, the Build to Rent market has become a magnet for institutional investors. In 2023 alone, the sector attracted £4.5bn in investment.
Why the enthusiasm? Stability, inflation-linked returns, and the alignment of Build to Rent projects with environmental, social and governance (ESG) goals make them an irresistible choice for pension funds, REITs, and private equity firms.
Moreover, institutional investment favours the long-term returns provided by stable income through rents which are more predictable and less volatile than one-off profits that are hypersensitive to interest rates and market downturns.
Build to Rent properties often appreciate over time whilst generating rent income, creating dual revenue streams that appeal to such investors.
Labour’s Autumn Budget will only strengthen this trend. The government has earmarked £3bn in housing guarantees to support Build to Rent developers and small-to-medium-sized enterprises (SMEs).
Additionally, a £500m boost to the Affordable Homes Programme (AHP) encourages mixed-tenure projects, integrating affordable rental homes within larger Build to Rent schemes incentivising joint ventures between Build to Rent operators and social housing providers to unlock investment opportunities.
In the short term, these measures will reduce financing bottlenecks, making it easier for developers to deliver projects on time. In the long term, they will enhance the sector’s ability to meet evolving tenant expectations while contributing to broader housing targets.
The Government is focused on its (overly) ambitious target of 1.5 million homes in this Parliament and the consultation on the changes to the NPPF are in full swing to support that goal. The intention being to simplify and accelerate development processes, particularly in regional cities.
That said, there is a craving for stability in the market because of recent and proposed legislative changes, most notably the Building Safety Act and Renters Rights Bill, making it that little bit harder for institutional investors, developers and operators to apportion risk and be certain about net initial yields.
The UK’s housing crisis is becoming chronic and requires innovative solutions which the Build to Rent sector is well positioned to lead the charge in, by:
1. Scaling up faster than traditional housing developments. Its ability to deliver high-density projects in urban areas ensures efficient land use and boost housing supply quickly.
2. Catering to a wide demographic, from young professionals to families—offering tailored designs and amenities that go beyond standard rental offerings.
3. Delivering high energy efficiency ratings through renewable energy installations, and low-carbon construction methods.
4. Considering retrofitting existing properties and blending sustainability with profitability.
5. Not being constrained by sale rates and interest rates in the same way as the traditional build to sell sector ensure stock is available much quicker.
6. Having institutional backing enabling large-scale developments and consistent delivery of housing stock, even during an economic downturn.
7. Demand for high-quality rental homes is rising, institutional investment is pouring in, and political support has never been stronger. As renters continue to embrace modern living spaces and investors seek stable, socially responsible returns, Build to Rent is positioned to redefine what it means to rent in the UK.
With ambitious government targets, a focus on sustainability, and a tenant-first approach, the sector offers a blueprint for solving the housing crisis – one professionally managed home at a time.
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