BLOGS

Approvals keep coming, even as the funding backdrop shifts

Planning committees across England, Scotland, Wales and Northern Ireland have continued to wave through large-scale Build-to-Rent (BTR) and purpose-built student accommodation (PBSA) schemes over the past year, even as developers and lenders warn that the capital stack behind these projects is under more strain than at any point since the sector's institutional era began.

That's the paradox at the heart of the current cycle: planning risk is falling for BTR and student housing relative to other residential typologies, just as funding risk is rising. REalyse planning data shows granted BTR applications delivered roughly 26,000 units in the first partial year of 2025/26 tracking, following 41,700 units approved in 2024 alone — a marked step up from the circa 32,000-33,000 units approved annually in 2022 and 2023. Student accommodation approvals have followed a similar upward path, with granted schemes rising from 210 in 2021 to 248 in 2024, and total approved units climbing from roughly 23,600 to 39,300 over the same period.

The headline message for institutional investors, lenders and developers: planning is not the bottleneck it once was for these two sectors. The bottleneck has moved further up the capital stack.

Scheme values are climbing faster than approval volumes

Where the funding squeeze becomes visible is in the value of what's being approved, not just the volume. REalyse data on the estimated value of granted schemes shows average BTR scheme value peaked at just over £100m in 2024, up from roughly £67-77m across 2021-2023, before easing back to the high £60m range through 2025 and into 2026. Total annual value of granted BTR schemes reached nearly £11.7bn in 2024 alone, before falling back to around £5bn in 2025 as fewer, though still substantial, schemes came through the pipeline.

Student accommodation tells a comparable story on cost inflation, if not on scale. Average scheme value rose steadily from roughly £15m in 2021 to £29m in 2025 — nearly doubling in four years even as unit counts per scheme grew only modestly, from roughly 113 units to 145 units. That combination — bigger budgets without proportionately bigger buildings — is consistent with what developers have been reporting anecdotally: build cost inflation, higher financing costs and more onerous fire safety and sustainability requirements are pushing up the price of getting a scheme oven-ready, independent of unit count.

For lenders and credit teams underwriting these deals, that cost trajectory matters as much as the headline unit numbers. A scheme approved on today's cost base needs today's rental and exit assumptions to stack up — not the assumptions embedded in a viability report drafted two or three years ago.

What this means for viability testing

Development managers preparing schemes for investment committee should expect construction cost assumptions from 2021-2022 vintage business cases to understate current reality by a wide margin. REalyse comparables and cost benchmarking can help recalibrate GDV and cost assumptions against what has actually been approved and delivered locally, rather than relying on stale desktop appraisals.

Rental performance is still doing the heavy lifting

The reason capital keeps chasing these approvals, despite the cost pressure, is that rental fundamentals remain supportive. REalyse rental listings data (last 12 months, yield outliers above 20% and auction-tagged listings excluded) shows average gross yields on BTR stock clustering between roughly 4.5% and 8.5% depending on location, with regional cities such as Manchester, Birmingham, Sheffield and Leeds delivering yields in the 6.5%-8% range against average asking rents of roughly £1,050-£1,600 a month. London and the wider South East, by contrast, show materially lower yields — typically 4.5%-5.8% — reflecting higher capital values against rents that, while higher in absolute terms (often £2,500-£3,600 a month), don't scale proportionately.

Student accommodation shows a similar pattern of solid income return: REalyse data for halls-type stock in a market like Cardiff points to average gross yields above 7%, albeit against longer average marketing periods (roughly 50 days) than mainstream BTR stock, which typically lets within 15-35 days across most regional markets.

The read-through for investors: regional BTR and student accommodation are still producing income returns that justify the higher entry cost of a forward-funded scheme, provided operators can maintain occupancy and rental growth. It's the exit — not the income — where the squeeze is being felt.

Slower exits are the real constraint, not planning

Anecdotal reports across the sector point to forward-funding deals taking longer to close and disposal timelines stretching as institutional buyers reassess pricing against a higher cost-of-capital environment. That's consistent with what REalyse days-on-market data shows on the leasing side too: average time to let ranges from roughly 15 days in fast-moving outer-London and commuter-belt postcodes to 35-plus days in some regional and northern markets, with student halls stock taking notably longer to fill than mainstream BTR — a signal that even strong-yielding stock needs longer runway to reach stabilised income.

For lenders and equity partners, this reinforces a now-familiar underwriting discipline: model longer stabilisation periods and more conservative disposal timing, even where planning risk is low and rental demand is proven. Schemes that would have transacted on a 12-18 month exit assumption two years ago may need 24 months or more built into the model today.

Outlook

The direction of travel is not that BTR and student housing are falling out of favour — planning data makes clear they're not. It's that the sector is bifurcating: schemes with strong locational fundamentals, realistic cost bases and patient capital continue to secure consent and reach financial close, while marginal schemes underwritten on pre-2023 cost and yield assumptions are more likely to stall between approval and delivery.

For developers and investors, the practical takeaway is to stress-test viability against current build costs and realistic disposal timelines before banking on planning momentum alone. For lenders, geographic and typology-level yield and time-on-market benchmarking — the kind REalyse comparables data supports — is becoming a more important part of collateral risk assessment than it was when capital was cheaper and exits were faster.