BLOGS

BTR: a rare bright spot in a subdued development market

UK residential development has had a difficult few years. Rising build costs, tighter lending conditions and planning system delays have squeezed speculative for-sale housing starts across England, Scotland and Wales. Against that backdrop, build-to-rent (BTR) has held up as one of the more resilient segments of the market — still attracting institutional capital, still securing planning consent, and still delivering completed rental stock into cities with acute undersupply.

That resilience shouldn't be mistaken for unchecked growth, however. REalyse planning data shows BTR approval volumes have actually softened since a 2022 peak, even as some of the largest schemes in the pipeline continue to secure consent. The story is less "boom" and more "flight to quality" — capital concentrating into fewer, larger, better-located schemes rather than spreading across the sector as it did a few years ago.

What the planning pipeline tells us

REalyse data on BTR-flagged planning applications shows a clear inflection point. In 2022, 143 BTR applications were submitted nationally, with 110 granted — representing roughly 22,100 approved units, the strongest year in our dataset. By 2023, submissions fell to 113 and grants dropped to 90, with approved units down to around 18,600.

The trend continued into 2024: only 63 applications were granted (from 121 submitted) — yet the units proposed within those applications actually rose to nearly 27,900, the highest of any year in the series. That divergence matters. Fewer applications are being approved, but the average scheme size within that shrinking pool is getting larger. This is consistent with what our platform users are reporting anecdotally: smaller, marginal BTR sites are struggling to reach consent or stack up financially, while flagship, large-unit schemes from well-capitalised operators continue to move through planning committees.

Early 2025 figures point to a further slowdown in grants, though it's worth treating in-year data as provisional — planning determinations lag submissions by months, and a portion of the applications submitted in the past 12–18 months are still working through the system.

Where the pipeline is concentrated

Regional analysis of granted, not-yet-completed BTR schemes confirms what most institutional investors already sense: London dominates by volume, but the Northern Powerhouse and Midlands corridors are meaningful secondary markets. REalyse data shows London-region local authorities collectively account for the largest share of granted BTR units still in the pipeline, with the North West and North East, and the East Midlands, forming the next tier.

Within London, boroughs such as Ealing, Wandsworth, Tower Hamlets, Greenwich and Lewisham each carry multiple granted BTR schemes, reflecting continued appetite for well-connected outer and inner London locations where land values support institutional rental economics better than for-sale product. Outside the capital, Birmingham, Leeds, Sheffield and Doncaster stand out as regional cities where BTR operators have secured multiple large-unit consents in the past 18 months — a signal that operators are underwriting rental growth and occupancy resilience in these markets with increasing confidence.

BTR performance: yields and lettings speed outperform

For investors weighing BTR against the broader private rental sector (PRS), the performance data supports the sector's continued appeal. REalyse rental listings data comparing BTR-flagged stock against non-BTR listings over the past 12 months shows:

• Yields hold a modest edge. BTR flats show a gross yield of around 5.85%, against approximately 5.73% for non-BTR flats. The gap is more pronounced in houses — BTR terraced and semi-detached rental stock shows yields around 6.2%, roughly 30–40 basis points above their non-BTR equivalents.

• BTR lets significantly faster. Average days on market for BTR flats sits at around 22–28 days across property types, compared with 37–42 days for standard PRS stock. For institutional landlords managing occupancy and income certainty across large multi-unit schemes, that speed-to-let advantage is a meaningful operational and underwriting benefit.

• Rent growth has cooled, in line with the wider market. Year-on-year asking rent growth in BTR stock has softened — flats down roughly 3.8%, houses down more sharply in some segments — broadly tracking a wider deceleration in rental growth after several years of steep increases. This suggests BTR operators aren't immune to affordability limits, but their faster lettings and stronger yields mean they're absorbing that slowdown from a position of relative strength.

Taken together, this data supports the institutional thesis for BTR: even as headline rent growth normalises, professionally managed rental stock continues to out-let and, in several property types, out-yield the wider market — a combination that matters more to underwriting than headline rent growth alone.

Outlook: consolidation, not collapse

The picture emerging from REalyse's planning and rental data is one of consolidation rather than retreat. Fewer BTR schemes are reaching consent, but the ones that do are larger and increasingly concentrated in a shortlist of proven regional markets — London's outer boroughs, and core cities including Birmingham, Leeds and Sheffield. For developers and lenders, that means site selection and comparables work matter more than ever: the era of "any BTR site in any city" appraising favourably has likely passed.

For investors, the yield and lettings-speed advantage over the wider PRS remains the strongest argument for continued allocation to the sector, even as rent growth normalises. As always, local market dynamics — planning stage, unit mix, and nearby comparable schemes — will determine which specific opportunities justify capital, and REalyse's planning and comparables data offers a way to underwrite that at scheme level rather than relying on national headlines alone.