The UK's Build to Rent revolution
A market coming of age
The UK's Build to Rent (BTR) market has reached a pivotal moment.
In 2024, we witnessed full-year investment top £5 billion for the first time – more than a third higher than in 2020.
Beyond simply being an impressive statistic, this record investment signals the acceleration and evolution of a sector that is fundamentally reshaping how we as a society think about renting vs home ownership.
Surging market activity
A record 21 operational buildings changed hands last year, representing nearly 30% of total deal volumes. This wave of secondary market activity reflects early investors reaching the end of their hold periods and recycling capital into new schemes, which is a clear sign of market sophistication and growing investor confidence. Despite this momentum, institutional ownership still accounts for just 2% of rental homes in the UK, highlighting the scale of opportunity ahead. At full maturity, we expect BTR to account for at least 30% of all private renters, equating to 1.9 million purpose-built rental homes. The runway for growth is extraordinary, but clearly there is still a long way to go.
New Acres, Wandsworth - A multifamily scheme
Present Made, Eddington - Single Family Housing
Diversification of the market
The composition of BTR investment is evolving rapidly. Single Family Housing (SFH) has emerged as the sector's biggest growth story, with more than £3.7 billion invested in funding or acquiring SFH since 2023. This represents nearly 40% of all BTR investment during that period; a remarkable shift that reflects the reality that houses already make up over 60% of rental stock in the UK, with half of all renters living in suburban areas.
Our research shows 71% of investors plan to target single family housing by 2029, a strategic pivot that makes perfect sense when you consider that institutional operators currently account for just 0.2% of those homes. Activity levels are rising fast, with 31 SFH deals completed in 2024, representing a 24% year-on-year increase and more than double the 2022 figure.
Meanwhile, co-living continues to gain traction, benefiting from £1 billion of investment since 2020. With an estimated 1.7 million people renting in shared accommodation across the UK’s urban centres, the opportunity remains significant given purpose-built stock accounting for just 0.4% of that demand.
Navigating market challenges
This growth story isn't without its challenges. High construction and financing costs have severely impacted development viability, while tighter building safety regulations have contributed to the challenges, resulting in a 20% fall in multifamily units under construction. Looking ahead, construction starts fall dramatically from 2025 onwards, which is a concerning trend at a time when we urgently need more rental housing in the UK.
The funding environment is reshaping investor strategies. Nearly 70% of respondents to our NextGen Living survey identified joint ventures as their preferred route to market.
Folk, Florence Dock, Battersea - A co-living scheme
Robust outlook for the future
The outlook remains robust. Already in Q1 this year, £1.1 billion has been invested, and Knight Frank is advising on a further £1.7 billion of assets which are likely to trade. Our survey respondents have outlined ambitions to invest a further £45 billion over the next five years, with close to half planning to increase their Living Sectors exposure by at least 80% by 2029.
Geographically, there's strategic focus on key urban centres, with London, Bristol and Manchester identified as the top three target locations, alongside Birmingham, Edinburgh, Bath and Oxford.
The BTR market is becoming more nuanced and increasingly data led
Success requires deep market intelligence, sophisticated operational capabilities, and the agility to adapt to evolving consumer preferences.
The fundamentals remain incredibly strong, and while challenges around build costs, regulation and funding must be carefully navigated, the sector's trajectory points toward a transformative decade ahead. Clearly the BTR revolution is already underway, but we really are only just getting started.
Written by Nick Pleydell-Bouverie, Head of Residential Investment, Knight Frank
Hear from our experts
The BTR sector is thriving - our NextGen Living research reveals why. Listen to Nick Pleydell-Bouverie, Head of Residential Investment, discuss market trends and investment opportunities on our Intelligence Talks podcast. Subscribe wherever you get your podcasts to stay informed on all property market insights.
Download the NextGen Living report
Drawing on the insights of 56 leading institutional investors who collectively manage £60 billion in living assets, we explore how improving economic conditions and evolving market dynamics are shaping investment strategies and unlocking new opportunities across the sectors.
