The Government appears to be attempting to legislate its way out of a chronic housing demand crisis, rather than addressing the root cause.
The only sustainable solution lies in building more homes and encouraging greater investment in Build-to-Rent properties. Yet there is little evidence that the current Government will meet its housebuilding targets – let alone deliver enough rental homes to meet the soaring demand.
Many organisations and housing bodies are lobbying for LHA rates to be unfrozen and linked permanently to local rents, but while this would provide much-needed relief for renters, it would also place additional strain on an already stretched welfare budget.
2026 could be a crossroads for Build to Rent (BTR).
The fundamentals are as strong as they have ever been. Demand for quality rental homes is intense, capital is available and the development pipeline is substantial. Yet sentiment is fragile, some schemes are stalling and the planning system is struggling to convert ambition into delivery.
What happens next will decide whether BTR becomes a mainstream part of the housing mix or remains a missed opportunity on the edge of policy.
If the government is serious about delivering 1.5 million homes, BTR cannot sit on the sidelines.
A realistic model for large sites is not the traditional 70% market / 30% affordable split, but a three-way blend of open market housing, affordable housing and BTR. A 33/33/33 approach allows BTR to play a full role, including discounted market rent, while still delivering a serious volume of affordable homes.
By contrast, the new “Grey Belt” rules, with an expectation of up to 50% affordable housing on former Green Belt, risks tipping schemes into non-viability once infrastructure, remediation, biodiversity net gain and design standards are factored in.
In London we have seen what happens when targets outrun the market’s capacity to deliver: starts collapse and affordable output falls with them.
Head of Build to Rent LRG Justine Edmonds predicts that 2026 is a clear divergence. Authorities that embrace BTR as a formal tenure in their local plans will see large, complex sites move forward. Those that cling to blanket 50% requirements on challenging land will watch landowners and funders look elsewhere.
Certainty will unlock stalled schemes
The BTR market is not short of demand but it is short of certainty. Multi-family submissions have dropped sharply from their peak, and even consented projects are on ice because the numbers no longer stack up. High build costs, layers of development taxation and an unpredictable fiscal regime have pushed many schemes to the edge.
Three moves from government would change the tone in 2026. Reinstating Multiple Dwellings Relief on Stamp Duty would immediately restore viability to thousands of homes that became marginal overnight when it was removed. Extending empty property business rates relief and removing council tax on newly completed but unoccupied BTR blocks would ease early cashflow. Clarifying VAT rules and extending zero-VAT on energy-saving materials to refurbishment would encourage much-needed retrofit of older assets.
It is imperative that the stop-start pattern of development ceases and that schemes are able to come to fruition with a stable framework. If ministers can give investors a clear, multi-year view on tax and regulation, the capital is ready to flow. If they cannot, the pipeline will stay on paper.
Regulation will reward the best operators
The Renters Rights Act will also shape 2026. An implementation roadmap is expected shortly, with the new tenancy system arriving ahead of database and ombudsman reforms. For BTR operators, this is not something to fear. Professionally managed, well-specified stock is already aligned with the direction of travel.
I expect the Act to accelerate the shift from fragmented buy-to-let towards larger, institutional landlords. That will sharpen the focus on service, building performance and long-term stewardship. Those BTR owners who invest in management, resident experience and sustainability will be well placed as the market consolidates.
Rental market resilience: demand rises as private landlords retreat
The rental market is evolving amid policy pressures, affordability challenges, and changing tenant expectations. Many private landlords are exiting due to tighter regulation, higher compliance costs and the increased tax burden shrinking supply as demand peaks. Rents are likely to continue to trend upwards throughout 2026.
Institutional Build-to-Rent (BtR) operators are filling the gap, with high-amenity, professionally managed developments increasingly shaping London and regional markets. Single-family rental housing is also growing, extending institutional models into suburban areas. The UK is gradually shifting toward a more European rental culture, where long-term renting is mainstream.
Capital flows are expected to remain robust but with a redirection toward mid-market, income-led residential assets. Build-to-Rent, PBSA, single-family rental, affordable housing, and suburban schemes are likely to attract foreign, institutional, and private-credit investors, with credit strategies playing a growing role as banks remain cautious.
A new ownership journey: the rise of lifecycle living
The traditional rent-then-buy trajectory is fading. Many younger people see homeownership as out of reach, giving rise to a more fluid housing lifecycle spanning:
- Student accommodation
- Co-living schemes
- Private rented flats
- Single-family rental homes
- Senior living and care
Developers and investors are now targeting these lifecycle stages, offering reliable management, amenities, and community. Co-living, once niche, now attracts young professionals through wellness spaces and social hubs. Senior living continues to expand, driven by an ageing population. Lifecycle focused strategies are set to reshape development and investment priorities by 2026.
Conclusion
2026 will show whether BTR is treated as a core part of the housing mission or as a footnote. The sector is prepared to deliver at scale. The question is whether planning policy and fiscal choices will allow it to do so.
Renters’ Rights Act and its impact on corporate landlords
How BTR is responding to demands for increased professionalism in the private rented sector. Article by Andy Jones, group director of corporate sales at LRG.
The Renters’ Rights Act has been met with mixed reactions across the property sector. While some private landlords have expressed concerns over increased regulation, corporate landlords – particularly those operating in the Build to Rent (BTR) sector – may find that the Act brings about considerable advantage.
The legislation has been on the cards for some time: it was originally proposed five prime ministers ago, by Theresa May as a ‘step change’ in protections for tenants with the objective, under the previous Conservative government, of ‘professionalising’ the private rented sector (PRS).
Regardless of whether or not the sector requires professionalisation, the former government, and today’s government in its stead, is undoubtedly strengthening the case for institutional investment in purpose-built rental housing.
The rental market is largely dominated by individual landlords, many of whom own one or two properties. While this has allowed for a diverse and flexible market, concern about inconsistencies in management quality and compliance with regulations is what has led to the imminent legislative change.
For corporate landlords and investors, this move presents an opportunity. BTR operators already adhere to high professional standards, offering well-managed, high-quality rental accommodation with a focus on long-term occupancy.
BTR schemes are professionally managed and run, typically utilising advances in proptech for increased efficiency and adhering to high standards in energy efficiency.
A more professional rental sector translates into a more stable and predictable market, which is precisely what investors seek.
With homeownership remaining out of reach for many (alongside the fact that BTR properties appeal to those who wish for greater flexibility) the demand for quality rental accommodation will only increase. This makes BTR a compelling proposition for long-term investment.
The numbers tell it all: a decade ago, the UK had only around 3,500 purpose-built BTR homes. By 2024, that figure had surpassed 100,000, with an additional 54,000 units under construction.
Increased interest from pension funds, insurers and global investors is growing the BTR market significantly. And while this growth is considerable, it still represents only a fraction of the overall PRS.
The opportunity for further expansion is vast and there’s ample opportunity for private investment alongside corporate investment.
However, to fully realise BTR’s potential, supportive policies must be put in place, from planning through to management. Better policy requires greater awareness of the benefits of BTR among politicians and other enablers.
This lack of awareness was very apparent to me at a property industry event recently: many MPs attended but while they talked enthusiastically about BTR, there was a glaring lack of understanding.
This is important because the Renters’ Rights Act alone won’t succeed in professionalising the sector: BTR must be better represented in the government’s housing strategy and both local and national policy.
Unlike other property sub-sectors, such as social housing or build-to-sell, there are few policies specifically tailored to support BTR growth. If policymakers are serious about solving the housing crisis, they must recognise BTR as part of the solution and take steps to encourage its expansion.