BLOGS

The UK build-to-rent sector entered 2025 carrying serious momentum — and the data suggests that momentum is now decisively tilting north and west of the M25. For the better part of a decade, London dominated institutional appetite for professionally managed rental homes. That era is not over, but a widening yield gap, a deepening affordability ceiling in the capital, and a maturing BTR planning environment in England's second-tier cities mean the next wave of large-scale schemes is increasingly being conceived and financed in Birmingham, Manchester and Liverpool.

This article draws on REalyse rental listing and planning application data to examine why.

The yield gap: regional cities are pulling clear of London

The most striking number in the current dataset is the spread between London and regional flat yields.

REalyse data covering the twelve months to June 2026 shows average gross rental yields for flats sitting at just 4.62% across London postcode areas. Contrast that with 6.86% in Manchester, 6.78% in Liverpool and 5.76% in Birmingham. That regional premium of roughly 2.0–2.2 percentage points over the capital is not trivial — at institutional scale it translates into meaningfully higher income coverage ratios and materially lower reliance on capital appreciation to underwrite a deal.

The implication for investors pricing debt against rental income is clear. With base rates still elevated relative to the pre-2022 era, a yield in the mid-to-high 6% range offers a far more comfortable spread than the sub-5% return available across most of inner London.

Liverpool is the standout performer on a pure income basis. Its average flat yield reached a peak of 7.47% in Q2 2025 and remained at 7.32% as of Q2 2026 — a level that, for a major UK city, is exceptional and reflects a combination of relatively low entry prices and strong rental demand driven by a large student and young professional population.

Manchester's yield has been remarkably stable, oscillating between 6.43% and 7.05% across nine consecutive quarters. That consistency — rather than a one-off spike — is what institutional underwriters want to see.

Supply signals: what the planning pipeline tells us

Rental yield performance is only half the story. The other half is whether the BTR pipeline is responding — and the planning data shows it emphatically is.

REalyse planning application data for schemes classified as build-to-rent, covering the period 2023 to mid-2026, reveals:

• Birmingham: 13 consented BTR schemes totalling 4,858 approved units, with a further 3 applications in progress representing 820 units in the pipeline.

• Manchester: 7 consented schemes delivering 1,344 granted units, alongside 12 applications in progress targeting a further 4,452 units — suggesting a wave of completions still to hit the market through 2026 and 2027.

• Liverpool: A smaller but growing pipeline of 1 granted scheme (401 units) and 2 in progress (854 units), pointing to a market earlier in the BTR maturity curve and therefore presenting greater opportunity for first-mover developers.

Birmingham's already-consented stock is the largest of the three cities in absolute terms, reflecting several years of active council engagement with BTR operators and a strategic need to replenish its post-Commonwealth Games development momentum. Manchester's pipeline, however, tells a different story: the sheer weight of applications still in progress — over 4,400 units awaiting decision — indicates that developer confidence in that market remains high going into 2026, even as some in the sector watch interest rate movements carefully.

Liverpool, still earlier in the BTR cycle, is arguably the most interesting city for investors with a longer time horizon. Its in-progress pipeline exceeds its already-granted stock by a factor of two, suggesting planning authorities and private developers are beginning to align in a city that has historically punched below its weight on institutionally managed rental supply.

Rents and demand: where tenants are and what they will pay

The rental listing data paints a picture of active, liquid markets in all three cities, with particular depth in Manchester and Birmingham.

REalyse data from June 2025 to June 2026 records:

• Manchester: 13,690 active flat listings, average asking rent of £1,254/month, average days on market of just 38 days

• Birmingham: 11,890 listings, average asking rent of £1,071/month, average days on market of 41 days

• Liverpool: 5,991 listings, average asking rent of £960/month, average days on market of 39 days

At a per-bedroom level, Manchester's dominance on rent is clear: a 2-bed flat averages £1,294/month, a 3-bed £1,875/month. Birmingham 2-beds average £1,141/month, with Liverpool slightly behind at £1,039/month. These are meaningful absolute rents that support sensible operating cost structures for institutional operators, even after service charges, management fees and void periods.

The 38–41 day average time-to-let across all three cities is a strong liquidity signal. In a market where properties are consistently being absorbed in under six weeks, the risk of prolonged voids — a critical sensitivity in BTR pro formas — is substantially mitigated compared with the national average.

What the headline averages do not capture is the quality premium being achieved by new-build, amenity-rich, energy-efficient stock. BTR schemes featuring gym facilities, concierge services and EPC A or B ratings are consistently commanding asking rents 10–20% above comparable older private rented stock in the same postcode district, according to operator data widely cited in the sector. REalyse comparables data allows investors to quantify this premium at a scheme-specific level, stress-testing rental assumptions against both new-build and secondary stock within a tight radius.

The EPC and ESG tailwind: new-build as the structural answer

Perhaps the most durable structural driver behind the regional BTR push is the intersection of tenant demand for quality and incoming energy efficiency regulation.

The Renters' Rights Act 2025 and anticipated Minimum Energy Efficiency Standards (MEES) reform — widely expected to set a floor of EPC C or above for all private rental properties in England and Wales within the next parliamentary cycle — create a structural disadvantage for aging housing stock and a structural advantage for purpose-built, energy-efficient BTR schemes. Purpose-built BTR developments are overwhelmingly delivered to EPC A or B standard, insulating investors from regulatory risk and meeting the growing preference of younger renters for lower utility bills.

In Birmingham, Manchester and Liverpool, a substantial share of the existing private rented stock is pre-2000 terraced housing and converted Victorian flats — the very asset class most exposed to MEES uplifts. As landlords of older stock face upgrade costs they cannot commercially justify, and some exit the sector entirely, the effective supply of compliant, well-managed rental homes tightens further. For BTR operators, that is a demand tailwind built directly into the regulatory calendar.

Investor appetite post-2025: cautious but committed

The sector is not without headwinds. Higher-for-longer interest rates compressed development margins across 2023 and 2024, and some schemes that were financially viable at 2021 construction cost assumptions have had to be repriced or restructured. Several large London BTR projects were paused or retendered during this period.

But the regional cities tell a subtly different story. Lower land costs in Birmingham, Manchester and Liverpool compared with Greater London — combined with higher achievable yields and local authority planning teams that have become demonstrably more BTR-literate — mean that schemes which were marginal in London remain deliverable in the regions. The Manchester in-progress pipeline of 4,452 units is the clearest evidence that serious capital has not left the regional BTR story; it has simply become more selective and more data-dependent in its underwriting.

Institutional investors using platforms like REalyse are increasingly running city-level yield screening, comparing planning pipeline density against rental absorption rates, and stress-testing rental growth assumptions using granular district-level comparables — precisely the kind of bottom-up analysis that was far harder to conduct at speed five years ago.

Outlook: the regional cities are not a second-best story

The narrative that regional BTR is a consolation prize for investors priced out of London no longer holds. Manchester's yield consistency, Liverpool's income performance and Birmingham's consented pipeline point to three cities where the fundamentals for institutionally managed rental housing are, in aggregate, stronger on an income basis than the capital.

The next two to three years will test whether that income advantage translates into sustained capital flows at the scale needed to close the structural undersupply gap — particularly in Liverpool, where the pipeline is still thin relative to market size. REalyse data will continue to track how planning consents, rental absorption, days on market and yield spreads evolve across all three cities as the BTR sector moves through its next growth cycle.

For investors, the data points to one clear conclusion: the regional rental boom is not a temporary dislocation. It is a structural realignment — and the build-to-rent sector is positioned to be its primary beneficiary.