More corporate landlords will enter the private rented sector in 2025, as they are less impacted by new rules and regulations, while buy to let landlords will leave the sector, claims Leaders Romans Group.
According to the lettings and sales agency, the Renters’ Rights Bill will have a huge impact on the private rented sector but less on the Build to Rent (BTR) sector.
With high demand and low stock expected to continue into 2025, Leaders Romans Group claims the Build to Rent sector could help tackle the supply and demand crisis.
Renters’ Rights Bill will have a significant impact on the private rented sector
Andy Jones, group director of corporate and BTR at Leaders Romans Group (LRG), says "new legislation will reshape the landscape of the private rented sector. The Renters’ Rights Bill will have a significant impact on the private rented sector, including ending Section 21 ‘no fault’ evictions, replacing fixed-term tenancies with periodic tenancies, limiting rent increases, banning rental bidding, allowing tenants to request permission to keep pets, and ending discrimination against tenants who receive benefits or have children.
The Bill will also introduce a new ombudsman, create a PRS database, implement a decent homes standard, and apply Awaab’s Law to the sector. Its impact on properties under corporate ownership, and specifically Build to Rent (BTR), will be less extreme, however, as many of these practices already exist in the sector.”
High demand persists
Mr Jones adds "that 2025 will still see a supply and demand imbalance as corporate landlords look to expand their portfolios. As we approach 2025, the lettings industry is entering a phase marked by stabilisation and opportunity. Rental inflation has slowed to an average of 3-4% for new lets, reflecting the effects of affordability constraints and renters’ budgets are beginning to limit how much rents can rise.
Despite this moderation, high demand persists, especially in regions with limited rental stock, providing considerable opportunity for investment. Supply remains constrained, with data showing that around 12% of current property sales are from landlord disposals: again, an opportunity for corporate landlords who are less impacted by regulatory changes – such as the emerging requirements concerning tenancy agreements and energy efficiency.”
BTR solution to supply and demand crisis
Mr Jones says "the key to tackling the supply and demand imbalance could lie with the Build to Rent (BTR) sector. Against the backdrop of the Renters’ Rights Bill and greater regulation for the PRS, the BTR sector is emerging as a key solution to the PRS’s supply-and-demand crisis.
Already, institutional investment in BTR developments has skyrocketed, with the British Property Federation reporting a 23% growth in completed BTR units over the past year alone. The sector now boasts over 120,000 completed homes, with a pipeline exceeding 273,700. Initially concentrated in London, BTR developments are expanding regionally, reflecting a growing appetite for professionally managed rental housing nationwide. Regional growth in BTR units (31%) has outpaced London (13%), demonstrating the sector’s broader appeal.”
Lloyds Bank continues to grow in the private rental sector
Lloyds Living – the private rental spin-off of the Lloyds Banking Group – says it is to offer more than 100 new homes to the rental market in Suffolk.
It’s part of a deal with housebuilder Taylor Wimpey, slicing off some of the company’s 1,150-home Chilton Woods scheme in Sudbury.
Lloyds Living already owns and operates a portfolio of more than 5,000 Build To Rent homes across the UK and has agreed the purchase of 107 homes to be built at Chilton Woods, the first of which are expected to be completed in late 2025. There will be two, three and four-bed houses.
Energy efficiency is a key feature of the homes Lloyds Living has acquired – all 107 will be connected to a centralised air source heat pump system.
The acquisition marks Lloyds Living and Taylor Wimpey’s first collaboration in the private rental sector.
Andy Hutchinson, chief executive officer of Lloyds Living, says “we are very pleased to be working with Taylor Wimpey for the first time at Chilton Woods, which is regenerating the area to the benefit of the local community in Sudbury. Chilton Woods is an ideal fit for Lloyds Living, bringing forward high-quality rental homes in a desirable but under-served location. The improved energy efficiency of these homes and their use of a centralised air source heat pump will bring tangible benefits to our customers.”
UK BTR investment activity topped £5bn lat year
Total investment into the UK’s build-to-rent (BTR) sector exceeded £5bn in 2024 for the first time ever in a single year, according to the latest research from Knight Frank.
The £5.2bn of investment activity was 11% up on 2023 and marked the fifth consecutive record year for investment. The full-year figures were bolstered by significant activity in Q4 when 23 deals totalling £1.9bn transacted.
Multifamily accounted for 59% of total investment activity, followed by single-family housing (SFH) (36%) and co-living (5%).
Investors committed £1.8bn to acquire or fund almost 6,000 SFH houses to rent in 2024, representing 36% of total BTR investment by value. While SFH currently accounts for 11% of completed BTR homes in the UK, it represents 22% of the under-construction pipeline.
Lizzie Breckner, head of BTR research at Knight Frank, said “the strong levels of investment into single-family housing have the potential to change the composition of the overall BTR market, which remains strongly weighted towards multifamily stock.”
North American capital outstripped UK domestic investment for the first time, reaching a record £2.8bn. Overall, cross-border spend increased 51% year-on-year in 2024, accounting for 66% of total investment.
Nick Pleydell-Bouverie, head of residential investment at Knight Frank, said “despite the challenging macro-economic backdrop, 2024 has been a record year for investment and delivery in UK’s build-to-rent sector. The unparalleled level of investment we’ve seen in 2024 clearly demonstrates the continued confidence in the market, as well as the diversification opportunities offered by the sector. In particular, the surge in North American capital highlights the UK’s position as an attractive market for global investors.
The record £5.2bn investment in 2024 marks a watershed moment for UK build-to-rent. With North American capital leading cross-border investment and the rapid growth of single-family housing, we’re seeing the sector growing and diversifying at pace. While the challenge of meeting energy efficiency standards remains significant, the robust investment appetite and expanding operational stock demonstrate that BTR is establishing itself as a cornerstone of the UK residential market.”