The value of the market for professionally managed rental accommodation in the UK has doubled from £35bn in 2019 to £71bn this year, and has the potential to further increase to £126bn by 2028, estimates Knight Frank.
The firm’s quarterly BTR market report reveals that just shy of £700m was invested in the UK BTR market in Q3 2023, taking investment for the first nine months of the year to £2.7bn.
Despite this long-term improvement, the quarter was 57% below the £1.6bn transacted in Q3 last year.
So far this year, volumes are 22% lower than the same nine-month period of 2022.
In addition, both deal numbers and the average deal size are down 14% on last year.
However, annual rental growth for new BTR lets was 8.4% in September, compared to 5.7% for the wider PRS.
Currently, there are 90,000 completed BTR homes across the UK in schemes with at least 75 units.
A further 67,000 are under construction and 74,000 have full planning permission granted, taking the total size of the sector to 230,000 homes.
The single family housing (SFH) market continues to expand — there are now more than 20,000 SFH homes complete or in the planning pipeline, making up 9% of the total BTR pipeline.
According to Knight Frank, the current supply-demand imbalance in the UK rental market, and the demand for rented homes — driven by multiple factors, such as the strength of the labour market and job creation, and higher mortgage rates — present a key opportunity for growth of the BTR sector.
