Construction activity in the build-to-rent (BTR) sector slowed in Q1 2024 due to build cost inflation and planning delays, according to new data published by the British Property Federation and Savills.
In Q1 2024, the number of BTR homes under construction fell 6% compared with Q1 2023. Construction activity declined 16% in London and by 1% in the regions. Completions now outpace starts on an annual basis, with the latter now standing at 12,500 in total.
The total number of BTR homes in planning saw a slight fall of 1% between Q1 2023 and Q1 2024, to 108,900 homes. However, the number of BTR homes with detailed planning permission is the highest on record at 59,000.
Ian Fletcher, director of policy at the British Property Federation, said: “The number of built-to-rent homes receiving detailed planning permission is the highest on record, which is testament to the strength of the product, investor appetite, and consumer demand for homes for rent. While it is encouraging that the sector continues to grow, the sector has faced a challenging 18 months. The sector needs to grow, so it can service huge rental demand, but policy decisions, such as the shock budget announcement to abolish multiple dwellings relief, hinder rather than help the sector.”
Guy Whittaker, head of UK BTR research at Savills, added: “Amid slowing build cost inflation, the number of completions in Q1 2024 has overtaken the number of starts for the second quarter in a row, widening to 3,404 homes from a gap of 421 homes in Q4 2023, suggesting that investors are prioritising existing schemes over new ones. Although starts are subdued, it is encouraging to see that there are a still number of homes at the construction and permission stage which have the potential to then support the starts we are lacking and contribute to more completions in 2024.”
