Investment volumes in the UK’s build-to-rent (BTR) sector dropped by 38.3% year on year in Q1, marking the slowest first quarter since 2018, according to data from Knight Frank.
The firm’s latest UK BTR Market Update found that just £679m was invested in the sector across 12 deals, compared to over £1.1bn in Q1 2025. Activity in Q1 was primarily driven by investors acquiring operational stock, which accounted for 61% of total investment.
The research echoes JLL’s quarterly BTR update last week, which reported £736m of UK BTR deals in Q1, the lowest quarterly figure since 2017, with multi-family housing investment falling to its second lowest quarterly total over the past decade, at £257m.
Knight Frank’s update revealed that completed UK BTR stock now stands at 165,790 homes, up 27% year on year. A further 50,690 homes are under construction, with 126,565 in the planning pipeline.
However, the total number of BTR homes under construction fell 10% year on year, caused by broader development headwinds. Earlier this month, British Property Federation data revealed that BTR planning consents in London were taking an average of 15 months to secure, 150% longer than the statutory time limit.
Knight Frank predicts a stronger Q2, but warned that geopolitical volatility sparked by the war in the Middle East has “resulted in a spike in UK gilt yields to reflect expectations that central banks may keep monetary policy tighter for longer”.
Oliver Knight, head of residential development and investment at Knight Frank, said the slowdown in delivery is a “direct result of changing regulation, increased cost and viability pressures impacting urban development”.
He added: “Recent planning reforms announced by the Labour government may improve the backdrop somewhat, but the magnitude of the impact remains uncertain.
“There is a significant opportunity for investors to deliver best-in-class, purpose-built assets for rent at a time when there is very little new supply being developed, while the ongoing supply shortage should support occupancy levels and rental growth.”
Both JLL and Knight Frank’s reports highlighted Pension Insurance Corporation’s purchase of Ebb & Flow in Reading from Lincoln MGT for over £200m as the standout deal of Q1 – and the largest for a single operational asset.
Guy Stebbings, head of BTR agency at Knight Frank, added: “Although investment was more subdued in the first quarter compared with previous years, our findings demonstrate the continued appeal of stabilised income against a challenging economic backdrop.
“We’re seeing a clear preference for assets that offer immediate cashflow and lower execution risk, supporting liquidity for high‑quality operational stock. While BTR has the potential to deliver much‑needed housing at scale, a more supportive economic environment will be critical for future growth, particularly in urban markets.”
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