Global property consultancy Knight Frank has released its latest UK Build to Rent Market Update for Q2 2026, revealing that while investment volumes have reached record highs, mounting viability pressures across regional markets are increasingly constraining future housing delivery.
Just over 6,700 BTR homes have been completed so far in 2026, with London and Tier 1 cities, including Manchester and Birmingham, accounting for almost half of all delivery. Tier 2 cities such as Nottingham, Liverpool and Sheffield accounted for just 14% of completions, with a further 14% delivered across smaller towns and regional locations.
Viability pressures remain acute across regional towns and cities, with many schemes requiring grant funding, Section 106 flexibility or affordable housing adjustments to remain deliverable.
The UK's completed BTR stock now stands at 166,359 homes, up 17% year-on-year, with a further 49,620 homes under construction and 125,639 progressing through the planning pipeline. Apartment-led multifamily development continues to dominate the pipeline, accounting for 71% of homes under construction.
Single-family housing, however, continues to gain momentum and now represents a quarter of all BTR homes currently being built, underlining its growing role in overall sector delivery.
In Q2, UK BTR investment volumes reached a record £2.08 billion, driven by a small number of large transactions highlighting continued investor appetite for the sector. Operational asset sales accounted for 29% of transactions during the quarter, with forward funding or forward commit deals representing 71% of activity.
"The investment case for BTR remains incredibly strong," said Nick Pleydell-Bouverie, head of residential investment at Knight Frank. "Demand for high-quality rental homes continues to outstrip supply in many markets, supporting strong occupancy levels and rental growth across the sector.
"Against that backdrop, it's no surprise that many investors are gravitating towards stabilised assets where income and performance are already proven. We're continuing to see a highly selective market, with a significant proportion of activity driven by a relatively small number of large transactions.
"The challenge now is ensuring that development opportunities can stack up financially so that much-needed new supply can be delivered. That's where viability remains a key consideration for investors looking to deploy capital into the sector."
"While supply continues to increase overall, we're seeing a growing divide between the largest cities, where schemes are still moving forward, and a number of regional markets where rising costs and tighter development economics are making it harder to bring forward new projects," said Lizzie Breckner, head of residential investment research at Knight Frank.
"Viability pressures remain, particularly across many regional locations, and are increasingly shaping where development can happen. As a result, multifamily delivery is likely to come under further pressure unless those challenges begin to ease.
"There are reasons to be optimistic. We're starting to see improvements in parts of the planning process, particularly around Gateway 2 approvals, which should help improve certainty for developers. But there is still more to do if we want to unlock delivery at the scale required."
"The level of investment recorded in the second quarter underlines the depth of capital targeting the living sectors," said Lisa Attenborough, head of Knight Frank Capital Advisory.
"From a lending perspective, BTR continues to be viewed very positively, particularly where there's a strong operational track record and income. We're still seeing healthy competition among lenders for the best-in-class assets and opportunities.
"Although broader market conditions remain uncertain at times, debt remains available and liquidity for both stabilised assets and development projects continues to be resilient."
