Build To Rent starts plunge 79% amid sector viability crisis

Build To Rent starts plunge 79% amid sector viability crisis

Build To Rent (BTR) developments across the UK have experienced a sharp 79% decline in new starts in the year to June 2026, with regional areas outside London hit hardest by falling investment and ongoing viability challenges.

New data from Savills reveals that BTR starts-on-site have collapsed nationally, marking one of the steepest drops in recent years. The fall is most acute outside London, where starts have dropped by 84%, while London itself has seen a 27% decline in homes under construction in Q2 2026 compared to the previous year. This downturn comes despite an increase in planning approvals, highlighting a growing gap between new developments commencing and those completing.

The trend reflects mounting financial and regulatory pressures on the BTR sector, which is seeing completions outpace new starts for the tenth consecutive quarter. Experts warn that political uncertainty, including debates over rent controls and property taxation reforms, is exacerbating the situation, deterring fresh investment and threatening the sector’s ability to meet rising rental demand.

Sharp decline in BTR starts signals deepening viability issues

According to Savills Residential Research, the Build To Rent sector accounted for around 8% of new homes nationally, underscoring its growing role in housing supply. However, the latest figures show a 79% plunge in new BTR starts over the past year, with a 21% drop in homes currently under construction compared to Q2 2025. London has seen a sharper fall in construction activity than the regions, despite the regions experiencing a more severe drop in new starts.

Danny Pinder, Director of Real Estate:UK, attributes the decline to a “viability crisis” that is making it increasingly uneconomical to launch new BTR schemes outside the capital. He highlights that strong tenant demand is not translating into new supply because of financial constraints and growing regulatory uncertainty. “Speculation around rent controls and property tax changes is weighing heavily on investment decisions,” he said.

Further compounding these pressures is a survey conducted by trade group RE:UK, which found that all respondents would reduce BTR investment and avoid areas with rent controls if such policies were introduced. This illustrates how policy uncertainty can chill investor appetite, even when controls are not ultimately implemented.

Political and policy uncertainty undermining investor confidence

The BTR sector’s challenges come amid broader political debates over rental market regulation. Recent weeks have seen speculation about potential rent freezes and changes to property taxation, creating an unstable environment for developers and investors. Although rent controls were recently ruled out by government ministers, the lingering uncertainty continues to impact investment decisions.

RE:UK has called on the government to provide clear, stable policy signals to avoid worsening viability pressures. Abrupt shifts or unclear regulatory frameworks risk further chilling investment in new BTR schemes, which could undermine efforts to increase rental housing supply.

Jacqui Daly, Director at Savills Residential Research, emphasises the importance of the sector’s continued growth. “Build To Rent has become an increasingly important source of housing supply, with the potential to unlock new development by enabling housebuilders to open sites with investors underwriting delivery,” she said. Daly stresses that meeting growing rental demand depends on the sector’s ability to bring forward new schemes across the UK.

Impact on landlords and letting agents managing BTR properties

The decline in new BTR developments has implications for landlords and letting agents operating within the private rented sector. Established BTR assets may see increased investor interest as new development slows, potentially affecting rental market dynamics and competition. For landlords, this means that the supply of professionally managed, purpose-built rental homes may tighten, potentially increasing demand for existing properties.

Letting agents should be aware that regulatory uncertainty and political debate continue to influence investor confidence and development pipelines. This environment may affect rental pricing, tenant demand, and portfolio strategies, especially for those with exposure to BTR schemes or institutional rental assets.

Furthermore, the viability challenges facing new BTR projects may lead to a slowdown in the introduction of new rental homes designed to meet modern tenant expectations, including energy efficiency and amenity standards. Landlords and agents will need to monitor these trends carefully as they could influence tenant expectations and the competitive landscape.

What landlords and agents should consider now

Given the ongoing viability crisis and political uncertainty, landlords and letting agents should review their portfolio strategies, particularly if they are involved in or considering investment in Build To Rent properties. Understanding the financial and regulatory environment is crucial to anticipating market shifts and managing risk.

Staying informed about government policy developments, especially regarding rent regulation and property taxation, will be vital. Landlords should also consider how the slowdown in new BTR supply might affect tenant demand and rental values in their areas. For letting agents, adapting marketing and management approaches to reflect changing supply conditions will be important.

Engagement with industry groups and trade bodies can provide valuable insights and advocacy opportunities. Monitoring planning and construction activity in local markets will help anticipate future supply changes and inform client advice.

Supporting landlords with compliance and portfolio management

The Landlord Association (TLA) offers resources and support tailored to landlords and letting agents navigating the evolving Build To Rent environment. Membership provides access to up-to-date compliance information and practical guidance on managing rental properties amid regulatory and market changes.

TLA is also developing ORBIT, a new property management and compliance platform currently available in BETA testing. ORBIT aims to assist landlords and agents in organising property records, managing rental documentation, and recording key actions related to tenancy management and compliance. This can be particularly useful for those managing BTR assets or portfolios affected by shifting development trends and regulatory uncertainty.

Exploring TLA membership and ORBIT BETA access can help landlords and agents stay organised and informed as the Build To Rent sector faces ongoing challenges.

Looking ahead, the future of Build To Rent development will depend heavily on government policy clarity and the sector’s ability to address financial viability. Landlords and agents should prepare for a period of adjustment as investment patterns evolve and new rental supply growth slows.

Sources: Landlord Today