BTR investment on track for a record year despite slower Q3

Investment in the UK’s build-to-rent sector reached £640m in the third quarter of 2024, an 8.5% decline on Q3 2023, when £700m was invested.  However, total BTR investment so far this year is 20% up on the same period in 2023 at more than  £3.2bn, according to the latest figures from Knight Frank. The agency found that that 65% of investment in Q3 was for multifamily schemes, with the remainder for single-family assets. Some 35% of capital deployed was into operational schemes, up from 20% in H1 2024, reflecting an increase in opportunities to acquire stabilised schemes. According to Knight Frank, more than 18,000 BTR homes have been completed so far this year, just shy of the record 19,000 in 2023. As a result, there are now 122,238 completed BTR homes across the UK. A further 58,951 homes are under construction and 101,729 have full planning permission, taking the total size of the sector to 282,918 homes. Supply continues to build in regional markets, with 67% of completions so far this year outside of the capital, led by Manchester and Birmingham. In total, 68% of the pipeline is located outside of London. Lizzie Breckner, head of BTR research at Knight Frank, said: “Investor appetite for BTR assets remains strong. We are currently tracking £1.6bn of transactions under offer or nearing completion, with 84% of these focused on multifamily schemes. “The pipeline for BTR remains strong, with nearly 60,000 homes under construction and another 102,000 with full planning permission. In addition to investment and supply, our BTR Rental Index also sheds light on rental growth trends. Our analysis shows that annual rental growth for BTR properties has eased to around 3% in markets outside of London, and slightly below that in the capital. This moderation follows years of record-high growth and reflects a more sustainable long-term relationship between rents and earnings growth.” Jonny Stevenson, head of BTR forward funding at Knight Frank, added: “The £3.2bn transacted year to date underscores the long-term attractiveness of BTR as an asset class. The sector continues to be regarded as resilient and scalable, offering strong opportunities for growth in both urban and suburban settings. Additionally, this quarter we have witnessed a notable increase in completion volumes, putting the sector on track for a record year in terms of new delivery.”