Professional investors show strong interest in Build To Rent sector
A recent survey reveals that 71% of professional property investors plan to invest in Build To Rent (BTR) developments despite a decline in new BTR construction starts, highlighting growing appetite for diverse rental housing options.
Handelsbanken’s latest property investor report, based on feedback from 200 real estate investors, property managers and landlords, shows a broadening focus among professionals in the UK residential rental market. The findings indicate a strategic shift towards combining traditional buy-to-let properties with purpose-built rental schemes and shared accommodation.
Nearly three quarters of respondents intend to increase their exposure to BTR, while 63% plan to expand holdings in houses, 59% in flats, and 48% in Houses in Multiple Occupation (HMOs). This diversification reflects an evolving approach to meeting varied tenant demand across different local markets and tenant types.
Survey details and investor sentiment on rental housing
The Handelsbanken research highlights that strong rental demand remains a key driver behind investment decisions. Among those planning to grow their portfolios, 58% cited rental demand as a primary reason. The report also notes growing interest in student housing, with 44% of investors aiming to increase exposure in this sector over the next year.
Although the report does not specify the methods investors will use to gain BTR exposure, the high level of interest suggests that purpose-built rental housing is becoming a significant component of professional investors’ strategies. A spokesperson for Handelsbanken commented that investors are increasingly looking beyond the traditional buy-to-let model, assessing which rental housing types best suit specific market needs.
This approach acknowledges that different property types appeal to different tenant groups. For example, family and suburban rental markets may favour houses, while flats, HMOs and BTR developments cater to other demographics such as young professionals, sharers and students.
Context of Build To Rent in the UK rental market
Build To Rent has been promoted as a solution to the UK’s housing shortage and rental affordability challenges by providing professionally managed, purpose-built rental homes. However, the sector has faced delivery challenges, including a recent decline in new BTR construction starts. This makes the survey’s findings notable as they indicate sustained investor confidence despite these hurdles.
Professional investors’ growing interest in BTR reflects broader trends in the rental market, including regulatory changes such as the Renters’ Rights Act and evolving tenant expectations around quality, security and management standards. BTR developments often offer longer tenancies and enhanced amenities, which can appeal to tenants seeking stability and community.
Investors’ diversification into multiple rental housing types may also be a response to the increasing complexity of the rental market, where different tenant segments have distinct needs and preferences. This strategy can help spread risk and capitalise on opportunities in various submarkets.
Implications for landlords and letting agents
For landlords with smaller portfolios or those traditionally focused on buy-to-let houses or flats, the rising interest in BTR and other rental formats suggests a need to consider how their portfolios align with tenant demand and regulatory environments. Diversification into HMOs, student housing or even partnerships with BTR operators could become more relevant.
Letting agents may see increased demand for their services managing a wider variety of property types and tenancies. The complexity of compliance, tenant management and property standards can vary significantly between traditional buy-to-let and purpose-built rental schemes, requiring agents to adapt their expertise and service offerings.
Landlords should also be aware of the regulatory environment affecting different rental sectors. For example, HMOs and BTR developments often have specific licensing, safety and management requirements. Staying informed about changes in tenancy law, safety regulations and local licensing schemes is essential to maintaining compliance and protecting rental income.
Uncertainties and areas to monitor
While the survey indicates strong investor intent, the actual pace and scale of investment in BTR and other rental formats remain uncertain. Factors such as planning delays, construction costs, and evolving government policies on housing and rental regulation could affect delivery and returns.
The impact of recent legislation like the Renters’ Rights Act on tenancy management and eviction processes may also influence investor and landlord strategies going forward. How these laws are interpreted and enforced could affect the attractiveness of different rental models.
Moreover, the survey does not clarify whether investors plan direct ownership, joint ventures, or investment via funds or platforms, which may have different implications for landlords and agents involved in property management.
Considerations for landlords amid changing rental market dynamics
- Review portfolio composition to assess exposure across houses, flats, HMOs, student housing and BTR opportunities.
- Stay updated on regulatory requirements specific to each rental sector, including licensing, safety standards and tenancy law changes.
- Evaluate the potential benefits and challenges of diversifying into purpose-built rental developments or shared accommodation.
- Consider working with letting agents experienced in managing diverse rental property types and navigating compliance complexities.
- Monitor market signals and government announcements that may affect construction, investment incentives and rental demand.
Keeping rental portfolios aligned with evolving investor trends
Membership of The Landlord Association offers access to detailed compliance resources and practical guidance to help landlords and letting agents manage diverse rental properties effectively. Our new property management and compliance platform, ORBIT, currently in BETA testing, is being developed to assist members in organising property records, managing tenancy documentation, and tracking regulatory changes.
ORBIT aims to support landlords in recording key actions such as inspections, repairs and communications, helping maintain evidence of compliance with licensing and safety obligations. As the rental market evolves, tools like ORBIT can help landlords stay on top of the requirements for different property types, including Build To Rent and HMOs.
Explore TLA membership and learn more about ORBIT BETA access to benefit from tailored support as you adapt your portfolio to changing market and regulatory conditions.
Looking ahead, the sustained interest in Build To Rent by professional investors may encourage greater development activity and innovation in rental housing models. Landlords and agents who keep informed and flexible will be best placed to respond to these shifts and meet tenant needs effectively.
Sources: Landlord Today
TLA - The Landlord Association