The Build-to-Rent (BTR) sector has continued to expand over the past 12 months despite the challenging economic conditions.
According to new research by the British Property Federation (BPF) the total number of BTR homes completed or in the pipeline across the UK rose to 263,694 at the end of the third quarter (Q3) of 2023.
This figure represents a year-on-year increase of 11 per cent year-on-year (up from 237,554 in the same period last year).
The number of completed homes increased to 82,660 while the number of units under construction increased by 12 per cent (to 52,852) and in planning 10 per cent (to 102,042).
In regional cities, which account for 60 per cent of all completed and pipeline BTR homes, activity remained relatively robust with the number of units under construction increasing by 16 per cent year on year (to 40,231) and new starts in Q3 2023 totalling 3,339.
Meanwhile in London, the research, undertaken with Savills, reveals increases in build and financing costs are having a severe impact on the delivery of larger, more capital-intensive schemes.
New starts in the capital totalled just 434 units in Q3, and 266 units in Q2. Units under construction increased by just five per cent year on year in Q3.
The report also highlights that 200 local authorities have now consented BTR developments or have schemes in the pipeline, up from 100 authorities five years ago, underlining the rapid growth of the sector across the UK.
The national planning pipeline remains robust, with 57,214 homes with detailed planning permission, and 25,792 homes at detailed application stage.
Ian Fletcher, policy director, British Property Federation, said: “There is huge demand for purpose-designed homes for rent in London and major cities, but the sector is facing significant headwinds in terms of delivery.
“Uncertainty on inflation and where interest rates will peak is causing projects to stall, particularly in London where developments are typically higher-density and more complex.
“However, there are nearly 60,000 homes with a detailed planning application in the sector suggesting market activity could pick up quickly when conditions are right.
“But policymakers must recognise more support may be required to sustain the growth of the sector in the short-term.”