UK’s BTR market set for record investment in 2025

Despite economic uncertainties, the UK's Build-to-Rent market is expected to see a record £6 bn (€7 bn) investment in 2025, according to a Lambert Smith Hampton report. 

Residential - sourced from LSH

This growth is fuelled by the sector's increasing stability, geographic expansion, and appeal to investors, with the market broadening beyond city apartments to include single-family rentals and co-living spaces. Existing BTR units have more than doubled over the past four years, exceeding 130,000, and a substantial pipeline of over 180,000 units are either under construction or planned.
Although London and Greater Manchester still dominate the BTR market, growth is increasingly driven by other regions. Almost 60% of BTR units currently being built are outside these two cities. Birmingham has become a BTR hotspot, with over 16,000 units in the pipeline and a significant increase in stock last year, including large developments like Moda’s Loudon’s Yard and Cortland’s Broad Street. Co-living is also expanding beyond London, now representing 15% of planned BTR projects, and 40% of existing co-living units are situated in regional cities like Manchester.
Investment in single-family rentals (SFR) remains strong, exceeding £1.9 bn (€2.2 bn) in both 2023 and 2024, significantly higher than the previous five-year average. While SFR currently makes up only a small portion of existing Build-to-Rent properties, it attracted a substantial 38% of total BTR investment in the last two years. This high level of investment is predicted to continue as investment platforms expand their SFR portfolios.
Trading of established, occupied BTR properties is booming. The first quarter of 2025 saw £1.1 bn (€2.2 bn) invested in BTR, following a record £5.2 bn (€6.1 bn) in 2024. Nearly half of the Q1 investment went into these stabilized assets, a significant jump from the previous year and well above the long-term average. Large deals included Ridgeback's £126 million purchase of Equipment Works and QuadReal and Realstar's joint acquisition of Birmingham's Allegro for around £115 mln (€135 mln).
After a slowdown in 2024, rent increases are anticipated to resume in 2025, with a projected 4.5% rise by the end of the year and a predicted long-term annual average of 4%. According to Hamptons, this is due to ongoing housing shortages and the expected effects of new legislation, such as the Renters’ Rights Bill.
Simon Wilson, senior director and head of LSH Living and Capital Markets, said: “2025 is set to mark another milestone year for the UK BTR sector. Amid wider economic uncertainty, the sector is evolving into a mature and diversified investment class, with rising activity outside of London, continued demand for SFR, and increased trading of stabilised multifamily assets.“