"Despite the continuing decline in the number of starts on sites and overall completions of new build-to-rent accommodation, there are some tentative green shoots that the planning pipeline is improving"
- Ian Fletcher - British Property Federation
New analysis from the British Property Federation has shown that the total number of purpose-built rental homes granted planning consent has increased by 35% over the past 12 months, with London leading the regions for the first time in two years.
Additional analysis, carried out by Savills, demonstrates the continuing challenge of converting consents into construction output, with the number of new homes under construction contracting throughout 2024 and down 18% since Q4 2023.
This drop in construction has been an ongoing trend in 2024, with the number of completions consistently outpacing the number of starts and mirroring the decline in starts on site of new homes across England as a whole. This gap is continuing to widen, with 10,900 more homes completing in 2024 than starting. The slowdown in construction is being seen more acutely in London, which has seen a 22% contraction compared to 16% in the regions.
Despite this slowdown in the construction of new build-rent-homes, there are encouraging signs that the pre-commencement pipeline is starting to be replenished, with a marked increase in the number of planning consents granted in Q4 2024.
This is most pronounced within London, which has seen the most build-to-rent consents granted by English regions at 7,523 homes, with 48% of those granted in 2024 within Q4. This represents a marked shift to previous years whereby the capital has lagged behind other regions in terms of build-to-rent completions since the end of Q2 2022 due to a combination of planning challenges and build cost inflation.
These elevated levels of consent should provide a boost to the overall future housing delivery pipeline within London. A pipeline which remains subdued with only 680 starts on site for all housing types recorded within Q1-Q3 2024 according to the latest provisional ONS data. While this figure highlights viability remains challenging, the additional consents do indicate strengthening investor and developer confidence within the London market heading into 2025.
Outside of the capital, the West Midlands recorded the highest number of new consents across 2024, mostly driven by Birmingham which saw almost 3,700 homes consented out of 4,038. This highlights the rapid expansion of the build-to-rent market across Birmingham over the last two years with nearly 12,000 homes either completed or under construction.
“Despite the continuing decline in the number of starts on sites and overall completions of new build-to-rent accommodation, there are some tentative green shoots that the planning pipeline is improving," explained Ian Fletcher, Director of Policy, British Property Federation, "This positions the build-to-rent sector quite well for when the development market once again picks up and is potentially an early sign at investor and developer confidence is slowly starting to return, especially within London."
He adds, "In the context of challenging delivery figures for housing overall, BtR has an increasingly important role to play in rapidly converting consents to homes as it is not reliant upon future sales absorption. Investor appetite for BtR remains strong and that is certainly something which the government needs to carefully consider in the context of its forthcoming housing strategy.”
Guy Whittaker, Head of UK Build to Rent Research at Savills, said, “The latest quarterly data shows that there continue to be challenges in the construction of new Build to Rent homes. But if these can be overcome, investors remain keen to invest in UK rented housing. Investment volumes for UK BTR reached a record £5 billion in 2024, surpassing the previous high of £4.6 billion in 2022.
He concluded, "This growth was driven by a strong Q4, with investors looking to close deals before year-end. Notably, there was a high proportion of investment from investors based outside of the UK. Cross-border investment rebounded to 51%, with North American capital alone contributing over £1 billion in Q4. This indicates renewed optimism in the UK BTR market and a strong desire to fund the next wave of BTR starts and completions.”
