View from . . . Ashley Perry, Chair of the Investor and Lender Forum

The Investor and Lender Forum is pleased to continue advancing our engagement with members across the Capital Markets focussed on Living assets. Our Committee is engaged and driving this agenda forward.

A reminder of some of our core objectives:

1. To champion BTR as a separate asset class to other residential, including legislation and positioning the sector for long-term success
2. To proactively address the key challenges and opportunities for the sector from an investment and lending perspective through the formation of dedicated working groups, or other means (key topics at the moment include Selective Licencing Schemes in place or emerging across the UK)
3. To inform and influence the priorities of other ARL committees and forums based on the needs of investors as well as encourage further membership from the BTR sector
4. To deliver open, transparent and insightful data sharing to achieve benchmarking across: rent comparables, operational practices and costs, customer satisfaction, and ROI

A maturing market

The BTR sector is maturing quickly with the sector still growing despite the macroeconomic headwinds that have persisted in recent years Data from Savills indicated that investment volumes for BTR broke new ground in 2024, reaching the £5 billion mark for the first time and surpassing the previous record of £4.8 billion achieved in 2022. 

Single Family Housing (SFH) enjoyed a busy year again, with £2.5 billion deployed – another record.

Established players meaningfully expanded their portfolios in 2024, alongside the emergence of new capital new to the market. It is widely expected that investors will pursue investment across both houses and apartments moving forward as part of diversified strategies.

Despite the capital flows continuing at pace there has, however, been a drop in new BTR starts, with the number of units under construction -18% lower than in Q4 2023. This comes amid continued cost pressures for viable development (Building Safety Act delays, yield environment and construction cost escalation)

As we heard in our Q1 State of the Market webinar that featured Knight Frank, Savills, BNP and JLL, there is considerable capital seeking to enter the BTR sector and it seems that there will be plenty of stabilised acquisitions and single-family opportunities that will be in favour while development remains challenging.

Navigating regulation and policy

Investors await clarity on the operational impact of the Renters Rights Bill which will soon become more obvious as the Bill passes through Parliament. Positively, North of the Border, it appears that Scotland will soon consult on potentially exempting the BTR sector from the measures outlined in the Housing Bill that have precluded investors from committing to new BTR developments in Scotland due to the uncertainty of the last few years following the Rent Freeze and subsequent Housing Bill launched in 2024. For the Investors and Lenders that all want to see more rental homes delivered across the quality spectrum, we look forward to further tailwinds to support this investment in the months and years ahead.