BLOGS

A planning system finally moving in institutional rental's favour

For an industry that has spent the best part of a decade complaining about planning delay, 2025 has offered something rarer: momentum. The government's push to streamline decision-making under the reformed National Planning Policy Framework, combined with local authorities under pressure to hit housing delivery targets, has created fertile ground for build-to-rent (BTR) and purpose-built student accommodation (PBSA) schemes — sectors that can deliver at scale, with institutional capital already lined up behind them.

Watkin Jones' recent consent for a flagship London BTR scheme is emblematic of the shift. It's a large, single-ownership rental block delivered by one of the UK's most established multi-family developers, in a market where local authorities increasingly view institutional rental as a dependable route to hitting housing numbers without relying on volume housebuilders' sales rates. For investors and lenders watching the sector, the question is no longer whether BTR and PBSA can scale — it's how fast, and where.

What the planning pipeline is telling us

REalyse planning data across the last five years shows a pipeline that has grown in scale even as approval dynamics have shifted. BTR applications have held in a fairly narrow band of roughly 90–145 submissions a year, but the number of units attached to each application has grown — annual proposed BTR units have generally sat in the 30,000–40,000 range, with 2024 alone accounting for close to 38,000 units despite a dip in the approval rate that year to under 90%, down from the high-90s seen in 2021–2023. That dip looks less like a policy retreat and more like a backlog effect, with a large share of 2024 and 2025 applications still sitting in "pending" status rather than being refused outright — a pattern consistent with committees taking longer over larger, more complex single-ownership schemes rather than rejecting them.

PBSA tells an even sharper story of acceleration. Annual submissions have climbed from around 300 applications in 2021 to378 in 2024, but it's the unit volumes that stand out: total proposed PBSA units roughly doubled between 2023 (around 52,000) and 2025 (approaching 107,000), even as the number of applications submitted held broadly flat. In other words, individual schemes are getting bigger. Approval rates for PBSA have been remarkably stable through the cycle, consistently in the 86–90% range — notably higher and steadier than the volatility seen in BTR decision-making, and a sign that planning authorities have become comfortable with the asset class as a known quantity with predictable local economic and housing benefits.

For investors underwriting forward-funded schemes, this combination — larger average scheme size, stable approval rates for PBSA, and a BTR pipeline where "pending" rather than "refused" dominates — points to a planning environment where scale and patience are being rewarded over speed.

Where the pipeline is landing

The story isn't evenly spread. London remains the natural home for the largest single BTR schemes by unit count, reflecting both institutional appetite and the scale of sites being brought forward by developers like Watkin Jones, Grainger and Get Living. But regional cities — Manchester, Birmingham, Leeds and Bristol among them — continue to see high volumes of both BTR and PBSA activity, driven by strong graduate retention, growing university intake, and land values that make large-scale rental schemes easier to stack financially than for-sale product.

Why institutional rental economics still work outside London

Planning momentum only matters if the underlying investment case holds up, and here the yield data reinforces the regional story. REalyse rental market data over the past 12 months shows gross yields on flats considerably higher outside the capital: Glasgow leads at close to 7.8%, followed by Leeds at around 7.2% and Manchester at roughly 6.75%, against a national average nearer 5.9%. London, by contrast, sits at the bottom of this comparison at around 4.8% — a function of higher capital values (averaging over £760,000 in our sample) against rents that, while the highest in cash terms nationally, don't scale proportionately.

This yield gap is a large part of why institutional capital has continued to flow into regional BTR and PBSA even as headline scheme announcements — like Watkin Jones' London consent — grab attention. For investors and lenders assessing new opportunities, the message from the data is consistent: London delivers scale and covenant strength, but the income return case is often stronger two or three hours up the M1 or M6.

What this means for developers, lenders and investors

For developers, the planning data suggests now is a reasonable window to bring forward larger, well-designed schemes — authorities appear more willing to engage constructively with scale, provided the tenure and management model (single ownership, professional management) is clear from the outset. For lenders, the stability of PBSA approval rates versus the more volatile BTR pattern is a useful underwriting signal: PBSA pipeline risk from a planning perspective looks comparatively low, while BTR schemes may require longer contingency for consent timelines even if ultimate approval remains likely.

For investors comparing opportunities, the combination of planning and yield data argues for a barbell approach — anchor exposure in London and the South East for capital growth and liquidity, while allocating income-focused capital toward the regional cities where gross yields comfortably clear 6.5–7.5%. As always, scheme-level comparables, local demographic profiles and university intake data should sit alongside these headline figures before committing capital.

Outlook

Build-to-rent and student accommodation are no longer niche alternatives to traditional housebuilding — they are becoming central to how England, and increasingly Scotland and Wales, plan to hit housing delivery targets. With PBSA unit volumes roughly doubling in two years and BTR schemes growing in average size even as approval timelines lengthen, the direction of travel looks clear. The developers, lenders and investors who move early — armed with granular planning and yield data rather than headline announcements alone — are best placed to capture the next phase of institutional rental growth.