The UK build to rent (BTR) sector continued to expand over the last 12 months, but increases in build and financing costs are stalling delivery of new developments in London, according to the latest research by the British Property Federation (BPF).
The BPF’s analysis, conducted in partnership with Savills, found the total number of BTR homes completed or in the pipeline across the UK rose to 263,694 at the end of Q3 2033 – up 11% year-on-year.
Activity remained relatively robust in regional cities with the number of units under construction increasing by 16% year-on-year. However, in London, there were just 434 new start units in Q3, and 266 units in Q2. Units under construction increased by 5% year-on-year in Q3.
There are currently 57,214 BTR homes with detailed planning permission in the UK and 25,792 homes at the detailed application stage.
Ian Fletcher, policy director at the BPF, said: “There is huge demand for purpose-designed homes for rent in London and major cities, but the sector is facing significant headwinds in terms of delivery. Uncertainty on inflation and where interest rates will peak is causing projects to stall, particularly in London where developments are typically higher-density and more complex.
“However, there are nearly 60,000 homes with a detailed planning application in the sector suggesting market activity could pick up quickly when conditions are right, but policymakers must recognise more support may be required to sustain the growth of the sector in the short-term.”
Jacqui Daly, director, residential research and consultancy a Savills, added: “With the Bank of England signalling that interest rates are now expected to stay higher for longer, demand for homes for sale is likely to remain weaker in the short to mid-term further fuelling demand for build to rent. The sector is expanding beyond the major cities and evolving to offer a wider mix of single-family and multi-family products which will see it become an even more important component of overall housing supply.”
