UK BTR completions up 13 per cent despite market challenges

UK: New figures from the British Property Federation (BPF) show the number of completed BTR homes in the UK has increased 13 per cent in the past year to 88,100 units despite market conditions slowing development activity.

The research, undertaken in partnership with Savills, shows the total number of BTR homes completed, under construction or in the planning pipeline stands at 253,402, up 12 per cent in the past 12 months. Single Family Housing continues to expand strongly with 28,000 units completed or in the pipeline, making up 12 per cent of the BTR sector.

The number of homes under construction increased by nine per cent, buoyed by major housebuilders agreeing forward funding transactions with investors comprising more than 2,000 homes for rent. Meanwhile, the number of new BTR homes in the design and planning phase increased 13 per cent to 111,815.

However, build cost inflation and wider economic uncertainty looks set to slowdown delivery with construction starts totalling 5,549 units in the first half of the year, down 55 per cent on the same period in 2022. In London, where high land values mean schemes are typically larger and more capital intensive, construction starts totalled just 836 units, down 80 per cent year-on-year (from 4,415 in H1 2022).

BPF policy director Ian Fletcher said: “Build-to-Rent is continuing to expand but the sector is not immune to the current economic uncertainty and cost inflation. At the current time it is very challenging to deliver large-scale capital intensive schemes, particularly in London, but there are fewer obstacles to the delivery of smaller developments in regional cities and single-family housing both which continue to grow as a proportion of housing supply in UK cities.”

Jacqui Daly, director, residential research and consultancy at Savills, added: “With interest rates now expected to stay higher for longer demand for new homes for sale is likely to be weaker which will constrain housing delivery. Build-to-Rent will have a key role to play in maintaining overall housing supply, and in the last quarter we have seen examples of major housebuilders agreeing to deliver a pipeline of rented homes, which has boosted the pipeline. The continued diversification of the profile of BTR deliverers is critical to its continued growth.”

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