UK BTR Market Update: Investment Momentum Continues

Knight Frank reports that more than £850 million was invested in UK build to rent in Q3 2025, up 35% year on year, taking the total for the first nine months to just over £3 billion. Single-family housing accounted for 46% of investment so far this year, though over £500 million went into urban multifamily development in Q3, showing continued appetite for forward funding. Some 53 deals had completed, up 8%. Excluding portfolios, the average single-family deal was £42 million against £83 million for multifamily.

High inflation, bond yields and uncertainty before the November Budget were expected to temper activity, although plenty of stock was under offer. The Bank of England held rates at 4.00% in September and slowed its quantitative tightening programme, with Governor Andrew Bailey warning that further cuts would be gradual. Knight Frank expects property yields to stay elevated relative to gilts and argues that income growth, not yield spreads, will drive returns. The UK has captured almost 30% of European BTR investment since 2023.

Completed BTR stock reached 153,367 homes, up 25% on a year earlier, with 54,354 under construction and 111,422 more with full planning. However, units under construction are 8% lower than a year ago, pointing to falling completions. Many schemes are unviable because of build and finance costs, planning delays and regulatory uncertainty, while buildings over 18 metres face an average 36-week wait for Gateway 2 approval.

Rental conditions are normalising after rents rose 30% since 2020, but unaffordable home ownership, population growth among 20 to 44-year-olds and landlords leaving the market will keep demand high. Knight Frank forecasts rental growth of 4.0% in 2025 and 18.8% over five years. Its analysis of 149 urban areas shows that places building more homes have kept rents more affordable, underlining the need for faster delivery across all tenures.

Source: Knight Frank Newcastle, original article (29 October 2025)