New starts in the build-to-rent sector have plunged by 55% in the first half of the year as cost inflation bites, according to new data by the British Property Federation.
The research, shared with EG and undertaken in partnership with Savills, found construction starts totalled 5,549 homes in the first half of the year.
In London, where high land values mean schemes are typically larger and more capital intensive, new starts totalled just 836 homes, down by 80% year-on-year from H1 2022.
The data also showed the number of completed build-to-rent homes in the UK has risen by 13% to 88,100 year-on-year in Q2.
The overall number of build-to-rent homes completed, under construction or in the planning pipeline stood at 253,402 in Q2, up by 12% on the previous year.
There were 28,000 single-family housing that were either completed or in the pipeline, accounting for 12% of the BTR sector.
The number of homes under construction grew by 9%, buoyed by major housebuilders agreeing forward-funding transactions with investors comprising more than 2,000 homes for rent.
The number of new build-to-rent homes in the design and planning phase increased by 13% to 111,815.
Ian Fletcher, policy director at the BPF, said: “Build-to-rent is continuing to expand but the sector is not immune to the current economic uncertainty and cost inflation.
“At the current time it is very challenging to deliver large-scale capital intensive schemes, particularly in London, but there are fewer obstacles to the delivery of smaller developments in regional cities and single-family housing both of which continue to grow as a proportion of housing supply in UK cities.”
Jacqui Daly, director of residential research and consultancy at Savills, said: “With interest rates now expected to stay higher for longer, demand for new homes for sale is likely to be weaker which will constrain housing delivery.
“Build-to-rent will have a key role to play in maintaining overall housing supply, and in the last quarter we have seen examples of major housebuilders agreeing to deliver a pipeline of rented homes, which has boosted the pipeline. The continued diversification of the profile of BTR deliverers is critical to its continued growth.”
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