The Housing Crisis, BTR and the Future of the UK Property Market

Build to Rent is becoming essential to solving the UK housing crisis. Explore why multi-family'>BTR must replace lost BTL supply and how policy reform can unlock delivery in 2026.

As we enter 2026, the UK housing market stands at a critical juncture. Despite the Government’s promise that it will “get Britain building again”, the level of net additional dwellings in England was over the past year, at, 208,600. This is around two thirds the level needed to reach the 1.5 million target. Moreover, planning permissions are trending at their lowest level for twenty years. It’s clear the Government needs to do all it can to boost home building in 2026 to avoid worsening the UK housing crisis.

The Indispensable Role of the Private Rented Sector in the UK Housing Market

The private rental sector (PRS) is often much maligned, but it is the tenure of choice for many. It accounts for 19% of households in Great Britain, equating to roughly 4.7 million households in England. This is not a niche tenure. Demand for this tenure began increasing in the early 2000s and accelerated in the post GFC era. Mainly reflecting affordability constraints. However, subsequently there has also been a cultural change, with the younger generation favouring flexible housing options. In addition, to driving a “usership economy” Millennials and Gen Z renters are increasingly expecting the "hotelisation" of living. They are demanding professional services, high safety standards, and on-demand amenities like co-working spaces, gyms, and maintenance apps.

The Structural Crisis: Why BTR Must Replace Lost BTL Supply in the UK

The traditional model of private rental housing is fragmented and predominantly supplied by Buy-to-Let (BTL) landlords. It is structurally incapable of providing this new level of service demanded. Moreover, it is in a state of structural decline. Since interest rates began rising in 2022, an estimated 150,000 rental properties have been sold by private landlords, a total of 600,000 properties have been lost in the past 8 years.

This exodus is driven by compressed returns resulting from unfavourable tax changes higher interest rates, and regulatory changes.

The Build to Rent Solution: Professionalization and Scale

multi-family'>BTR provides the necessary professionalisation and scale to meet the dual challenges of BTL contraction and evolving tenant expectations.

multi-family'>BTR is not “any new block of flats that happens to be rented out”. At its core, the multi-family'>BTR model is:

• Purpose-built for long-term rental (design, durability, management, resident journey)
• Professionally operated with an institutional mindset (service, retention, reputation risk)
• Long-hold capital (pension funds, insurers, long-duration funds), seeking stable income rather than quick trading) Investment surpassed £5bn for the first time in 2024, and although investment this year night turn in marginally lower it is expected to grow significantly in the future. The Living sectors is often cited as the most attractive CRE asset class and CBRE IM predict it will be the largest asset class by 2024.

The sector has built meaningful momentum, but it is still emerging. The total sector pipeline is now around 300,000, 140,000 of these homes completed. And importantly, the “shape” of multi-family'>BTR is evolving to serve diverse housing needs, demonstrating its adaptability beyond traditional urban blocks.

• While Multifamily housing (city-centre apartments) remains the established multi-family'>BTR model, Single-Family Rental (SFR) is the fastest-growing sub-sector, attracting over £2.5 billion in investment in 2024. SFR targets families needing suburban space and school catchment areas.
• Co-living is also emerging, focusing on community and cost-certainty for transitional demographics, acting as a vital "landing pad" for talent entering UK cities.

Challenges and Headwinds to Scaling Build to Rent

Even so it remains an embryonic solution relative to the structural problem. The completed multi-family'>BTR homes represent only approximately 2% of the total PRS stock, and it is not yet scaling fast enough to offset the BTL losses.

The sector is facing significant friction that prevents its necessary expansion:

1. Viability Pressures: Acute construction cost inflation (running 5–8%) combined with high interest rates compresses returns, causing investable schemes to become non-starters. The number of homes under construction has recently fallen by 13%, signalling a slowdown in future supply.
2. Planning Gridlock: multi-family'>BTR delivery is often delayed by a lack of recognition and understanding of newer tenures at the local government level. Approvals can currently average between 6 and 12 months.
3. Regulatory Bottlenecks: While essential, the Building Safety Act and its Gateway process for high-rise buildings introduce significant regulatory delays, adding 12–24 months to project timescales and slowing high-rise completions.
4. Fiscal Friction: The abolition of Stamp Duty Land Tax Multiple Dwellings Relief (MDR) in June 1, 2024, has been cited as a policy drag that hampers delivery, especially in less viable secondary cities.

Action Plan: Enabling BTR for 2026 and Beyond

If the government genuinely intends to meet its housing target of 1.5 million homes and mobilise long-term capital, it must start actively enabling multi-family'>BTR as a core delivery channel.

We recommend the following steps to support investors and accelerate multi-family'>BTR delivery:

1. Planning Acceleration: Introduce clearer national guidance and mandate that local authorities incorporate multi-family'>BTR policies where housing need supports it. A practical fix is to implement a fast-track determination timeline (e.g., 8 weeks) for compliant multi-family'>BTR schemes, replacing the current average of 6–12 months.
2. Regulatory Streamlining: Resource the regulator for high-rise buildings adequately and streamline the Building Safety Act approval processes to reduce timescale uncertainty and prevent future pipeline depletion.
3. Fiscal Stability: Reinstall an MDR-style relief specifically for institutional multi-family'>BTR investment, particularly to support scheme viability in secondary cities and marginal markets.
4. Strategic Policy Integration: multi-family'>BTR must be explicitly designed into the government’s approach under the Planning and Infrastructure Bill, treating it as a mainstream route to housing supply. This will ensure viability frameworks and land disposal strategies support rental-led development.

The policy choices made over the next 5–10 years are critical. Supporting multi-family'>BTR is supporting professional landlords who can provide the stable, high-quality, and professionally managed rental housing that the UK’s 4.7 million renting households deserve.

By committing to policy changes that remove planning and fiscal friction, the government can leverage billions in long-term capital to deliver housing at scale and structurally improve the UK's housing offer, cementing multi-family'>BTR’s place as the necessary infrastructure of a modern housing market.

The UK housing market is heading into 2026 with a structural problem - and Build to Rent is no longer a “nice to have”. It’s essential infrastructure.

England delivered 208,600 homes last year - barely two-thirds of what’s needed to hit the Government’s 1.5m target.

Meanwhile, planning permissions have fallen to a 20-year low.

At the same time, the private rented sector is undergoing a profound shift:

• 4.7 million households rely on renting
• 600,000 rental homes have been lost from Buy-to-Let in 8 years
• Younger renters increasingly expect service, safety, and flexibility
• Institutional capital is ready to deploy - multi-family'>BTR investment exceeded £5bn in 2024

The traditional BTL model simply can’t meet this demand.

Build to Rent can - but only if policy unlocks it.

In my latest piece, I explore:

• Why multi-family'>BTR must replace lost BTL supply
• The rise of SFR and co-living as new rental infrastructure
• The viability, planning, and regulatory barriers slowing delivery
• Practical policy steps to accelerate multi-family'>BTR in 2026 and beyond

If the UK is serious about solving the housing crisis, multi-family'>BTR needs to be treated as a core delivery channel - not a niche tenure.