Build to rent starts and completions fall sharply in the last year

Both construction starts and completions for new build-to-rent homes have dropped sharply in the last year according to the latest figures from the British Property Federation and Savills.

The numbers show that UK starts of build-to-rent properties in the year to June have dropped by almost exactly a third, to 14,253, compared to 21,367 in the year to June 2022. Completions in the same period fell by more than a quarter – 26% - to 9,841 homes, from 13,312 the year before.

The British Property Federation (BPF), which produces the annual survey with consultant Savills, said the figures showed that the sector was continuing to expand in totality despite economic uncertainty, with the total number of build-to-rent homes developed in the UK having now hit 88,100 – up 13% on the year before.

The BPF said “build cost inflation and wider economic uncertainty looks set to slowdown delivery”, and its data showed that construction starts had fallen away particularly sharply in the first six months of this year, with starts down 55% in total.

The drop off in build commencing on site is focused particularly on London, the survey showed, “where high land values mean schemes are typically larger and more capital intensive”, with site starts of just 836 homes seen in the first six months of the year, down 80% on the 4,415 seen in 2022.

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This data comes after Housing Today has reported that tens of thousands of units of high-rise housing schemes are on hold in the capital currently due to new stipulations brought in by the mayor requiring all homes to have a second means of escape. The requirement has been brought in, but so far the detailed regulations setting out exactly how building designers have to meet it haven’t been produced.

The BPF and Savills data said that a total of 253,402 build-to-rent homes were either completed, under construction or in the planning pipeline, up 12% on the figure a year ago.

The survey showed that single family or suburban build-to-rent housing was making up more of the mix of the development pipeline, with 28,000 units completed or in the pipeline, making up 12% of the Build-to-Rent sector. Some recent build-to-rent growth has come from housebuilders doing deals with suburban build-to-rent investors to sell large portfolios of homes for rent originally designed to be sold on the open market

Ian Fletcher, policy director, British Property Federation, said build-to-rent was not immune to the current economic uncertainty and cost inflation. He said: “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, Savills said: “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.”