Build to rent investment activity reached £1.2bn in the second quarter of 2024, marking the second-highest level of investment in any Q2 on record, the latest Savills update reveals.
The deals completed will contribute close to 4,500 build to rent homes.
Almost three quarters (74%) of the deals were for funding future development rather than into stabilised assets.
The biggest deal this quarter was between Leaf Living and Vistry, making up 36% of the investment in 2024 so far with the housebuilder agreeing to sell 1,750 new homes across 36 sites, primarily in South East England.
Investment into single family housing made up half of the investment in the 12 months to June 2024, up from 7% across 2021 and 2022.
Savills data found that the UK’s build to rent stock now stands at over 115,000 completed homes, up by 24% nationally compared to Q2 2023.
There are a further 45,400 homes under construction and 100,700 homes in the planning pipeline, including those in the pre-application stage.
The total size of the sector currently stands at 261,870 homes, up 4% compared to Q2 2023.
It found that the median time to let a build-to-rent home across London and the core cities combined in the year to May 2024 was 24 days, compared to 22 days in Q2 last year.
While the increase is small, it has lowered from the average of 32 days in 2018/2019, which Savills says is due to a lack of supply.
Data shows that in May 2024, there were 29% fewer listings compared to the 2018/19 average across Great Britain.
Savillis says more rental properties are needed to keep pace with the persistent high demand.
In the wider private rental sector, annual rental growth across the UK has slowed to 5.8% in May.
While this is more than double the 2012-2019 average of 2.1% per annum, it is less than half its peak of 12.2% in July 2022.
Supply shortages in the wider rental market have been a key driver of BTR demand, Savills highlights.
Savills head of UK build to rent research Guy Whittaker says the latest figures of build to rent investment activity is “encouraging” as he expects “momentum to build throughout the second half of the year”.
“The build to rent investment thesis remains sound: there are still 30% fewer homes to rent across the UK compared to the 2018/19 average, a figure that has hardly changed since the start of 2022.”
“Additionally, demand for build to rent has been stronger, going by ‘time to let‘ data. It took just 24 days to let a build-to-rent home across the eleven largest UK cities, compared to 32 days pre-pandemic.”
“This is consistent across London and regional cities, suggesting that slowing rental growth is a result of markets becoming more price-sensitive rather than any change to underlying demand.”
“Double-digit rental growth was never sustainable, and we expect the rental market will now return to a more ‘normal’ seasonal pattern. There are signs that this is already underway in some markets, but we will need a few more months of rental growth data to be certain.”
