Investment in the UK build to rent (BTR) sector hit a record high of £4.6bn in 2023, driven by exceptional growth in single-family housing (SFH), which accounted for a more than 40% share of total BTR investment, according to Knight Frank’s latest UK Build to Rent Market Update.
The full year total was boosted by an exceptionally strong final quarter, which saw £1.9bn transacted – a 126% increase compared with the £850m transacted in Q4 2022.
Vistry’s £573m sale of more than 1,500 SFH units to Blackstone-backed Leaf Living boosted the annual figures, but even excluding this deal, Knight Frank said that SFH witnessed consistently strong investor appetite.
Jack Hutchinson, partner in the residential investment ream at Knight Frank, said: “The growth in single-family housing investment was the standout story in this record-breaking year for build to rent. The scale and pace of investment, especially from single-family operators and overseas capital sources, demonstrates how much momentum there is behind the BTR concept.
“While we have experienced a challenging year from an investment perspective, with increasing build and development costs, as well as higher interest rate environments, BTR has maintained the ability to shine through the economic storms and address the chronic shortfall in rental housing stock, making it an increasingly coveted asset class.”
Lizzie Breckner, head of build to rent research at Knight Frank, added: “Our data shows the exponential rise of SFH from less than £20m in 2020 to £1.9bn in just three years. Investors are betting on the structural undersupply of mid-market family rentals in the UK, as affordability pressures become more acute following the removal of government support for first-time buyers and higher mortgage costs. With SFH now firmly embedded within the BTR ecosystem, all signs point to continued strong growth. Knight Frank is already tracking a further £1.4bn of SFH and MFH deals under offer or completing in early 2024.”
