Supported by falling borrowing costs and a steady housing market, investor sentiment is improving across the UK. Among the strongest performers has been the build-to-rent (BTR) sector, which recorded impressive results throughout 2024.
With more people choosing to rent for longer periods as access to homeownership becomes increasingly difficult, tenant demand remains high. At the same time, housing supply has struggled to meet this demand, pushing rents higher. Data from HM Land Registry shows rental prices climbed by 8.7% in the year to January 2025. Landlords have also seen rental yields rise, averaging 6.93% as of December.
BTR developments have gained traction over the past few years, initially concentrated in London and later expanding to other major towns and cities. These purpose-built residential blocks aim to meet growing demand by offering homes specifically designed for long-term renters.
Strong investment growth
Savills’ latest research outlines just how much the BTR sector has expanded. The sector attracted £5 billion in investment during 2024, setting a new annual record and beating the previous peak of £4.8 billion in 2022.
The final quarter of 2024 proved particularly active, with a surge in deals completed. Savills attributes this to increased activity from overseas investors, especially from North America, who contributed £1 billion of capital in Q4 alone.
Housebuilders and developers have responded to this growth by adjusting their strategies. Many firms, particularly those headquartered in London, have introduced BTR divisions to help accelerate delivery.
Savills suggests this momentum signals a stronger outlook. “If 2024 was the year real estate capital markets stabilised, then 2025 could be the springboard for recovery. A number of key milestones were reached in the second half of last year which has noticeably improved investor sentiment and built momentum.”
Shifting price ranges
Price trends within the BTR market have also started to shift. While new, top-end schemes continue to command premium rents, existing developments have moved closer to mid-market levels. As more projects are delivered, increased supply could help reduce pricing pressure both for investors and renters.
Savills’ report points out that each newly built rental home creates opportunities for several households. For instance, a family moving into a new, higher-quality property frees up their previous home, enabling others to move up in turn.
Spotlight on Manchester
Greater Manchester has become one of the key locations for BTR. More than 19,000 homes have been delivered in the last ten years, with 9,000 located in Manchester itself and 8,000 in Salford, an area experiencing rapid growth.
This influx of homes has attracted a broader range of investors, helping to expand rental options across various price points. In 2024, advertised rents for one- and two-bedroom units ranged from £825 per month at the most affordable BTR schemes to £1,912 at the highest end, according to Savills. This £1,087 gap between entry-level and top-tier prices shows how BTR is catering to a wider segment of the market than ever before.
BTR developments have played a significant part in urban renewal, particularly in Manchester and cities like Leeds. Many projects are built on former industrial sites, with large-scale regeneration plans that create new communities and attract both tenants and long-term investment.
Investment patterns have also shifted. Last year, 88% of BTR investment went to markets outside of London, the highest share recorded. This growing focus on regional cities suggests continued confidence in the sector’s ability to meet housing needs across the country.
Reference: Buy Association
