BLOGS

Two-speed planning system emerging

The UK's planning system has never treated all residential development equally, but the gap has become harder to ignore. As higher interest rates and construction cost inflation squeeze development finance across the board, build-to-rent (BTR) and purpose-built student accommodation (PBSA) schemes are still clearing planning committees at rates well above general residential applications.

This isn't a story about planning reform lowering the bar everywhere. It's a story about which asset classes local authorities and committees are prepared to back, and which ones institutional capital is still prepared to fund through to a decision.

The approval rate gap, by the numbers

REalyse planning data across the last five years shows a consistent pattern: BTR schemes have posted approval rates in the 91–99% range every year since 2021, while general residential ("other residential") applications have hovered between 71% and 76%. Student accommodation has sat comfortably in between, typically in the mid-to-high 80s.

For 2024, the most complete recent year in the data, BTR approval rates stood at roughly 91%, and student schemes at close to 85%, against approximately 71% for the broader residential category. Encouragingly, both specialist sectors have held or improved their approval rates into 2025 and the early part of 2026, even as overall residential approval rates have stayed flat.

The unit volumes tell a complementary story. Granted BTR units rose from around 12,600 in 2021 to over 41,000 in 2024, before easing slightly in the year to date. Student accommodation followed a similar trajectory, with granted units climbing from roughly 8,300 in 2021 to nearly 39,000 in 2024. Neither sector has seen anything like the pullback visible in general residential grants, where approved units fell from a 2022 peak of over 420,000 to around 340,000–360,000 in 2023 and 2024.

The takeaway for developers and lenders: committees are not simply granting more of everything. They are differentiating, and BTR and PBSA are the categories benefiting most from that differentiation.

Where the pipeline is landing

Regional data from the last two years of granted schemes shows London and the North West as the clearest hotspots for both sectors, with London leading on student accommodation units and running a close second on BTR. Scotland stands out as a significant approval centre for student schemes, reflecting the scale of its university cities, while the West Midlands and Yorkshire and the Humber are building meaningful BTR pipelines outside the traditional London-Manchester axis.

This spread matters for underwriting. Concentration in a handful of high-demand cities has historically been a feature of institutional rental investment, but the presence of meaningful approved pipeline in the Midlands and Yorkshire suggests operators are following renter demand and land value arbitrage into secondary markets, not just doubling down on London and Manchester.

Why the fundamentals still support the case

The planning story lines up with what's happening on the income side. REalyse rental market data shows BTR-flagged listings consistently commanding a premium over the wider private rental sector, with average asking rents running roughly £300–350 higher per month than non-BTR stock through 2024–2026, alongside a modest but persistent yield advantage of around 15–30 basis points.

That combination, a rent premium built on professionally managed, amenity-rich stock, plus yields holding up better than the wider market, is precisely what continues to justify institutional capital committing to BTR at scale even as debt costs remain elevated. Lenders assessing collateral and rental assumptions for these schemes are working from a segment where the income case has, if anything, strengthened relative to general-needs housing over the past two to three years.

Student accommodation benefits from a related but distinct dynamic: structurally undersupplied purpose-built stock against resilient, demographically-driven demand from a growing higher education population, particularly in university cities where existing private rented sector stock is already stretched thin.

Outlook

None of this means BTR and PBSA are immune to the broader financing squeeze. Scheme viability, land costs and forward-funding terms remain under pressure across the sector, and the drop in BTR granted units so far in 2026 versus the same period last year is worth watching rather than dismissing.

But the planning data is unambiguous on relative resilience. For developers weighing where to deploy scarce development finance, and for lenders assessing where planning risk is lowest, BTR and student accommodation continue to look like the two residential subsectors best placed to keep moving through the pipeline while general-needs housing approvals stay under strain.