Alarm Bells for Build To Rent as building starts show huge slump

New analysis from the British Property Federation (BPF) shows a dramatic slump in the number of Build To Rent units started.

Although delivery of completed units has been strong - completion levels hit 22,000 over the preceding 12 months - the number of starts has fallen thanks to what the BPF calls “the stickiness of the ongoing challenges in the sector, including build cost inflation and cost of debt” along with “investors … impacted by economic and political uncertainty.” 

The analysis, conducted with Savills, found completions running at over two and a half times the average for the period 2017-19. They are now “starting to make an appreciable difference to housing delivery across a growing number of locations within the UK” claims the BPF.

When included with those homes under construction, or with planning approval, there’s been year-on-year BTR growth of 4%. The total sector pipeline is now close to 262,000 new homes, or just over the five-year average of total housing completions of all tenures across England of 210,000 dwellings per year.

The total number of completed units now stands at 115,778 having surpassed 100,000 in the previous quarter. 

But the slump in starts makes disturbing reading for the sector. For the third quarter in a row the number of completions has remained above the number of starts, with the gap between the two now widening to 10,600 homes, up from 3,400 in the previous quarter.

This is reflected in the sharp contraction in the number of homes currently under construction, down 19% compared to Q2 2023. In London, the fall has been more acute at 21% to 13,200, compared to the regions which have fallen by 19% to 32,200. Across the period Q2 2023 to Q2 2024 there were only 11,500 starts in total, down 30% from the 2017-19 Q2 average.

Ian Fletcher - BPF director of policy - warns: “More action is needed to convert planning consents to starts on site and bring new schemes forward through the planning process. We need continued growth to service huge rental demand and look forward to working with the new government to make that happen.”

And Guy Whittaker - head of UK BTR research at Savills - adds: “”It is clear though that more must be done to encourage the number of units under construction to address the 19% decline seen over the past 12 months. This will ensure a steady flow of new homes comes forward to meet demand and meet the wider regenerations benefits  of BTR.”

More positively, Savills and the BPF say the total number of BtR homes in planning remain at near-record levels with a pipeline of 57,000 homes. Supporting this, the number of consented homes has risen by 17% compared to Q1 2023, though applications have not kept pace with consents, with the number of homes at detailed application stage currently down 31% over the same period.