BLOGS

A sector at a crossroads

Britain's build-to-rent sector entered 2026 carrying two contradictory signals. On one hand, a new voluntary code of practice — the first of its kind — promises to define what good looks like for the hundreds of thousands of renters now living in purpose-built rental communities. On the other, the data on actual delivery is stark: construction of new BTR homes in London collapsed by 80% in 2025, with just 613 homes starting on site in the entire capital across the year, according to analysis by the British Property Federation and Savills.

The collision of rising regulatory ambition and falling supply is shaping up to be one of the defining tensions in UK residential property through the rest of this decade.

What the BTR Alliance code actually means

The code, published by the Build to Rent Alliance — a body formed between the Association for Rental Living (ARL) and Real Estate:UK (RE:UK) — is the product of nearly four years of consultation with operators, investors, and residents. It sets out verifiable standards for accommodation quality, amenity provision, and the day-to-day experience of living in a BTR community, explicitly aiming to deliver outcomes "significantly above the statutory minimum."

The code is currently voluntary and applies to purpose-built rental apartment developments in England and Wales. Single-family housing and other living sectors are expected to be brought in under additional provisions later. Throughout 2026, the code will continue to be refined and tested, with formal signatory status and the verification process only becoming active once the final version goes live.

For institutional operators and investors, the framing matters. The Alliance positions the code as a self-regulatory tool that demonstrates the sector's ability to hold itself to account — an important signal to policymakers at a moment when the broader private rented sector is being reshaped by the Renters' Rights Act 2025, which came into force on 1 May 2026, abolishing assured shorthold tenancies and ending no-fault evictions in England.

The code could prove commercially shrewd. REalyse data consistently shows that well-managed, amenity-rich BTR schemes in strong urban locations command a meaningful rental premium over comparable private landlord stock — a premium that becomes easier to justify, and to market, when backed by an independently verifiable standard.

London's 80% collapse: planning, regulation, and viability

While the code signals sector confidence, the construction numbers tell a more troubled story. Nationally, BTR starts fell sharply in 2025 — but London's 80% year-on-year drop, from several thousand to just 613 homes beginning construction, stands in a category of its own.

The British Property Federation and Savills data shows completions have outpaced starts for eight consecutive quarters — a structural gap that will inevitably translate into tighter supply and upward pressure on rents over the next two to three years. At the same time, detailed BTR planning applications fell 21% in a single quarter, raising further concerns about the medium-term pipeline.

Three overlapping pressures explain the squeeze.

Planning delays remain the dominant constraint. BTR homes are now taking an average of 15 months to clear the planning process in London — 150% above the statutory determination period. With 23 of London's 33 boroughs recording zero housing starts in Q1 2025, and total London completions falling to just 30,000 homes in the year to June 2025 (down 12% year-on-year, according to EPC-based estimates), the capital's position as the engine room of BTR growth looks increasingly fragile.

Building safety regulation has compounded the issue. Delays at the Building Safety Regulator's Gateway Two process — through which higher-risk buildings must pass before construction can proceed — left almost 10,000 homes stuck for more than six months as of mid-2025. London's reliance on higher-rise apartment development, the natural format for BTR in dense urban areas, has made the capital disproportionately exposed to this bottleneck. Changes introduced at the Regulator towards the end of 2025 are beginning to show some impact, but the damage to the 2025 pipeline was already done.

Viability remains the third leg of the problem. Construction cost inflation, higher financing costs since the 2022 interest rate cycle, and the requirements of second-staircase legislation have all squeezed scheme economics. REalyse planning data suggests that the average proposed BTR scheme is now nearly twice the size of completed ones — 295 homes in planning versus 147 homes for completed schemes — reflecting the scale at which operators believe schemes must operate to remain viable. Smaller sites, once a useful feeder of supply, are increasingly marginal.

Regional resilience, but not immunity

Outside London, the picture is less severe but still concerning. BTR starts in the regions fell 37% in 2025 — from 12,781 to 8,063 — according to BPF and Savills data. That is a meaningful contraction by any measure, even if it lacks the drama of London's figures.

There are countervailing signs. The total number of BTR homes with detailed planning consent has risen 17% nationally to 67,307, and homes in the planning pipeline have grown 6% in London alone to 41,968. If even a portion of those consented schemes progress to construction, the supply position could improve materially through 2027 and 2028. Total completed BTR stock has reached 146,700 nationally — up 13% in the past 12 months — and regional markets including Manchester, Birmingham, Leeds, and Bristol continue to attract institutional capital.

REalyse data across these regional markets points to gross yields in the 5%–7% range for stabilised BTR assets in core city locations, which, while compressed from earlier in the cycle, remains broadly investable for patient, long-term institutional capital. The question is whether planning and viability barriers can be reduced enough to get more schemes off the ground while those yields hold.

Will higher standards deter investment, or attract it?

The critical question posed by the simultaneous arrival of the new code and the data on collapsing starts is whether stricter standards will make investment harder to justify — or whether they will help professionalise and deepen a sector that still struggles to compete with home ownership for public legitimacy.

The honest answer is probably both, depending on scheme economics. For a well-capitalised operator with a large, modern scheme in a high-demand city-centre location, meeting the code's standards is likely already standard practice. The compliance costs are manageable and the reputational upside — particularly in the context of the Renters' Rights Act's shift in the political conversation toward tenant protections — is real.

For marginal schemes or smaller operators, the calculus is harder. A voluntary code that becomes an industry expectation — and eventually, perhaps, a prerequisite for institutional finance or local authority support — will raise the cost floor for BTR development at precisely the moment when viability is already stretched.

Rightmove data showing 17 households competing for each advertised rental property underlines how acute rental demand has become. That demand pressure is the sector's strongest argument for sustained investment. But demand does not build homes — capital does, and capital needs returns that the current combination of planning delays, building safety requirements, financing costs, and emerging compliance expectations is steadily eroding.

Conclusion: standards without supply is not a housing strategy

The BTR Alliance code is, in itself, a welcome development. A sector that houses a growing share of the population — and whose total stock has now surpassed 146,000 completed homes — benefits from clear, verifiable standards that build public trust and differentiate institutional BTR from the fragmented private rented sector.

But standards cannot substitute for supply. With London BTR construction at a near-standstill, regional starts down by a third, and the pipeline of new applications thinning, the risk is that 2026's policy environment is simultaneously raising the bar for how BTR homes must be delivered while making delivery itself harder to achieve.

The 67,307 consented homes nationally represent a meaningful latent pipeline. Converting those permissions into foundations — quickly — is the sector's most pressing challenge. REalyse data on planning velocity, scheme viability, and local market rental dynamics will be central to identifying where that conversion is most likely to happen first, and where institutional capital should be positioned ahead of the next wave of delivery.