The total number of build-to-rent (BTR) homes granted planning consent has risen 35% over the past 12 months, according to data published by the British Property Federation.
However, analysis undertaken by Savills found the number of new homes under construction fell in 2024, ending the year 18% down on Q4 2023.
This gap between construction starts and completions is continuing to widen, with 10,900 more homes completing in 2024 than starting. The slowdown in construction is being seen more acutely in London, which experienced a 22% contraction compared with 16% in the regions.
There was a marked increase in the number of planning consents granted in Q4 2024. This was most pronounced in London, with 48% of the 7,523 homes receiving planning consent in the capital last year granted in Q4.
Outside London, the West Midlands recorded the highest number of new consents last year, mostly driven by Birmingham, which saw almost 3,700 homes consented.
Ian Fletcher, director of policy at the British Property Federation, said: “Despite the continuing decline in the number of starts on sites and overall completions of new BTR accommodation, there are some tentative green shoots that the planning pipeline is improving. This positions the BTR sector quite well for when the development market once again picks up and is potentially an early sign at investor and developer confidence is slowly starting to return, especially within London.
“In the context of challenging delivery figures for housing overall, BTR has an increasingly important role to play in rapidly converting consents to homes as it is not reliant upon future sales absorption. Investor appetite for BTR remains strong and that is certainly something which the government needs to carefully consider in the context of its forthcoming housing strategy.”
Guy Whittaker, head of UK build-to-rent research at Savills, added: “The latest quarterly data shows that there continue to be challenges in the construction of new build-to-rent homes. But if these can be overcome, investors remain keen to invest in UK rented housing. Investment volumes for UK BTR reached a record £5bn in 2024, surpassing the previous high of £4.6bn in 2022.
“This growth was driven by a strong Q4, with investors looking to close deals before year end. Notably, there was a high proportion of investment from investors based outside of the UK. Cross-border investment rebounded to 51%, with North American capital alone contributing over £1bn in Q4. This indicates renewed optimism in the UK BTR market and a strong desire to fund the next wave of BTR starts and completions.”
