"2025 has been a strong year for BTR despite wider market headwinds"
- Jack Hutchinson - Knight Frank
The build-to-rent sector invested £4.7bn in 2025, down 9.1% on the record £5.1bn transacted in 2024 but 23% above the ten-year average, according to Knight Frank's Q4 2025 UK Build to Rent Market Update.
Single-family housing accounted for 55% of total annual investment, surpassing multifamily for the first time in a landmark shift for the sector.
Knight Frank recorded £1.7bn invested in Q4 2025, delivering a stronger finish than expected to a year shaped by challenging macroeconomic conditions affecting real estate investment more broadly.
Single-family housing investment totalled a record £2.6bn across 44 deals, driven by growing investor demand for lower-density, suburban rental stock. The UK's operational BTR stock reached 158,205 homes, up 16% year on year, with a further 51,755 homes under construction, putting the sector on course to exceed 200,000 completed homes within the next few years.
Around 22,000 new BTR homes completed in 2025, roughly 20% lower than the 2024 peak. Single-family housing represented 25% of all BTR completions, its highest share on record.
Delivery of multifamily and co-living schemes fell 28% and 33%, respectively, as viability and regulatory pressures continued to challenge high-density development. Knight Frank forecasts just under 24,000 completions in 2026, indicating a modest improvement on 2025 delivery.
"Our latest analysis shows a sustained and growing appetite for purpose-built rental housing, with £1.7 billion invested in Q4 alone," said Lizzie Breckner, head of BTR research at Knight Frank. "While annual volumes have softened, reflecting recent policy uncertainty alongside pricing, debt and development pressures."
She added that confidence is gradually returning. "The UK's BTR stock continues to expand at pace, growing 16% over the past year, and the strength of the pipeline means the sector is on course to exceed 200,000 operational homes within the next few years."
"2025 has been a strong year for BTR despite wider market headwinds," said Jack Hutchinson, partner, residential investments at Knight Frank. "Multifamily continues to lead on delivery, but it has been a milestone year for SFH, which has taken the top spot for annual investment for the first time at £2.6bn. Record capital inflows and its growing share of completions underline investor confidence in the depth and resilience of the SFH sector."
Notable transactions in Q4 2025 included the £630m disposal of PRS REIT and the trade of the TPG/Gatehouse portfolio, which reflects a growing appetite for single-family housing products at scale.
"2025 saw a fundamental shift in the real estate debt market," said Lisa Attenborough, head of Knight Frank Capital Advisory. "High levels of liquidity meant that the balance of power shifted towards borrowers. With debt supply at its highest level in more than a decade, we expect to see continued margin compression for best-in-class deals throughout 2026."
Margins for stabilised BTR assets are consistently below 150bps, with single-family housing close behind at around 150bps. "We are seeing huge lender demand for Living sector transactions, both development and investment," she noted.
