"Amid wider economic uncertainty, the sector is evolving into a mature and diversified investment class, with rising activity outside of London, continued demand for SFR, and increased trading of stabilised multifamily assets"
- Simon Wilson - Lambert Smith Hampton
The UK’s Build-to-Rent (BTR) sector is on track to attract a record £6 billion in investment during 2025, according to Lambert Smith Hampton’s latest market report, Built to Last.
Despite persistent economic and geopolitical challenges, investor confidence remains strong, underpinned by a maturing sector, ongoing diversification, and a resilient pipeline of new developments.
Growth and maturity continue across the sector
Since 2021, the number of operational BTR units has more than doubled, reaching over 130,000 as of Q1 2025. The sector’s development pipeline remains healthy, with more than 56,500 units under construction and an additional 126,000 in the planning stages.
A significant part of the sector’s evolution is its expansion beyond traditional urban rental models. The rise of single-family rental (SFR) homes and co-living schemes is helping BTR appeal to a wider demographic, supporting the transition from a niche offering to a more mainstream component of the UK housing market.
Regional cities drive pipeline growth
While London and Greater Manchester continue to represent the majority of existing BTR stock, activity is increasingly shifting beyond these areas. Nearly 60% of units currently under construction are located in regional cities, reflecting broader national demand.
Birmingham stands out as the fastest-growing regional BTR market. The city saw a 29% increase in stock during 2024 and currently has over 16,000 units either in planning or under construction. Key developments include Moda’s 398-unit Loudon’s Yard and Cortland’s 440-unit scheme on Broad Street.
Co-living, once concentrated in the capital, is also gaining ground elsewhere. It now accounts for 15% of the BTR development pipeline, with 40% of operational co-living beds located outside London. Nearly half of all consented and active co-living developments are now in regional cities, led by Manchester.
Institutional interest in SFR remains high
The SFR segment continues to attract strong investor interest. Investment totaled £1.9 billion in both 2023 and 2024, more than eight times the five-year average. Though SFR units currently represent just 10% of operational BTR stock, they accounted for 38% of total BTR investment during this period.
This growth has been supported by institutional platforms acquiring stabilised or near-stabilised portfolios, helping SFR gain further momentum.
Stabilised asset transactions reach record levels
A notable trend in the current market is the rise of stabilised multifamily asset trading. In Q1 2025 alone, BTR investment reached £1.1 billion, following a record-setting £5.2 billion in 2024. Stabilised assets made up 48% of multifamily investment volume in Q1, up significantly from 27% in 2024 and far above the five-year average of 15%.
Recent high-profile transactions include Ridgeback’s £126 million purchase of Equipment Works in Walthamstow and the joint acquisition of Birmingham’s Allegro by QuadReal and Realstar for around £115 million.
Outlook: Rental growth expected to rebound
Rental growth is forecast to recover in 2025, following a period of moderation in 2024. Hamptons projects average rents will rise by 4.5% this year, with a long-term growth trend averaging 4.0% annually. These expectations are driven by sustained undersupply and potential market adjustments following legislative changes such as the Renters’ Rights Bill
“2025 is set to mark another milestone year for the UK BTR sector," comments Senior director and head of LSH Living and Capital Markets, Simon Wilson, "Amid wider economic uncertainty, the sector is evolving into a mature and diversified investment class, with rising activity outside of London, continued demand for SFR, and increased trading of stabilised multifamily assets.
He added, “As many of the assets developed over the past decade begin to change hands, we expect a sustained trend towards forward purchases and operational transactions, underpinned by the strength of institutional capital and a maturing market landscape.”
