The total number of purpose-built rental homes has reached more than 120,000, a 23 per cent increase over the past 12 months, according to the British Property Federation (BPF).
At the same time, however, analysis, from estate agency Savills, shows construction has contracted sharply, with the number of homes being built down 20 per cent year-on-year.
This drop in construction has been an ongoing trend in 2024, with the number of completions consistently outpacing the number of starts.
This gap is continuing to widen, with 12,400 more homes completing in 2024 than starting.
The slowdown in construction is being seen more acutely in the regions, which dropped by 23 per cent to 34,500 homes, than in London where numbers fell by 11 per cent to 15,500 homes.
The number of build-to-rent (BtR) homes currently complete, under construction or in various stages of planning is over 273,700, with the sector growing five per cent year-on-year.
But while the sector pipeline remains robust with 103,000 homes in the planning system, including 54,500 homes with planning consent, the number of new applications coming forward has dropped by 12 per cent in the last quarter.
The slowdown in construction and new planning applications is a result of increased cost pressures (partly as a result of regulatory change) and points to a potentially longer-term supply challenge.
The abolition of multiple dwellings relief (MDR) in June, is already impacting the ability for schemes to progress due to viability challenges, and the BPF estimates that the number of homes foregone could be between 13,000 and 25,000.
The number of local authorities with BtR in their pipeline has increased to 212, meaning two-thirds (67 per cent) of local authorities in the UK now have BtR being brought forward as part of housing delivery.
The BPF says BtR is an essential part of the housing market for both landlords and tenants, especially in the context of the government’s 1.5 million homes target, as it can delivered faster and is not dictated by sales rates.
Ian Fletcher, director of policy, British Property Federation, says: “Build-to-rent has made a critical contribution to housing over the last 12 years with £40 billion invested to date and 120,000 new homes built.
“The sector provides housing across the country for a wide range of people, especially since its diversification into low-rise homes for families.
“However, increased regulatory and other costs that have faced the sector for the last few years is starting to take its toll on new schemes, as evidenced through a drop in construction starts and new planning applications.
“Investors continue to be interested in build-to-rent for the UK market but we need to see policy that encourages schemes to progress and attracts the £250 billion of further investment that is needed to meet demand.”
