The UK build-to-rent sector is on track to attract £6 billion in investment in 2025, the highest annual total to date, according to wide-ranging report from LSH unveiled at the House of Lords.
According to LSH's “Built to Last" report, this surge in activity comes despite ongoing economic and geopolitical headwinds and as such reflects the sector’s growing resilience, diversification and appeal to institutional investors.
The number of operational units has more than doubled in the past four years, surpassing 130,000 in the first quarter of 2025. LSH says the pipeline remains robust, with over 56,500 units under construction and another 126,000 in planning.
Driving this is the continued expansion and diversification of the sector. The rise of single-family rental and coliving schemes has broadened the appeal of BTR beyond its traditional base of young, urban renters, LSH points out, saying that these emerging sub-sectors are helping the market mature and meet the evolving needs of renters.
Regional cities are, in turn, fuelling market expansion.
While London and Greater Manchester continue to account for two-thirds of existing BTR stock, regional markets are taking centre stage. Nearly 60% of units under construction are located outside these strongholds.
Birmingham leads the way and is now the fastest-growing BTR market outside London, LSH says. Over 16,000 units are either under construction or have received planning consent, with stock in the city increasing by 29% in 2024. Notable developments include Moda’s Loudon’s Yard (398 units) and Cortland’s Broad Street (440 units).
Coliving is also gaining traction. It now accounts for 15% of the development pipeline and the model is moving beyond the capital. LSH reports that regional cities now host 40% of operational coliving beds, driven by landmark openings in Manchester, with nearly half (46%) of all consented and under-construction coliving schemes outside London.
The single family rented sector also continues to outperform, with £1.9 billion invested in both 2023 and 2024, more than eight times the five-year average. While SFR comprises just 10% of operational BTR stock, it attracted 38% of total investment in 2023–24. LSH says this strong investor appetite is expected to continue, supported by the expansion of institutional platforms acquiring stabilised or near-stabilised portfolios.
The trading of stabilised multifamily assets has become a significant feature of the market as well. In first quarter 2025, BTR investment reached £1.1 billion, following a record £5.2 billion in 2024. Stabilised assets represented 48% of first quarter multifamily investment volume, a sharp rise from 27% in 2024 and well above the five-year average of 15%.
Major transactions included Ridgeback’s £126 million acquisition of Equipment Works in Walthamstow and the joint purchase of Birmingham’s Allegro by QuadReal and Realstar for approximately £115 million.
Rental growth outlook
Rental growth is expected to rebound in 2025 after a cooling in 2024. LSH says rents are forecast to rise 4.5% by year-end and sustain a long-term average of 4% annually. These projections, provided by Hamptons, reflect "continued undersupply and expected impacts from legislative changes, including the forthcoming Renters’ Rights Bill".
Simon Wilson, senior director and head of LSH living and capital markets, said in a statement: “2025 is set to mark another milestone year for the UK BTR sector. 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.
“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.”