The Growth in the Popularity of Build to Rent as an Investment Choice

The Growth in the Popularity of Build to Rent as an Investment Choice

Justine Edmonds, Head of Build to Rent / Leasing Strategies at LRG

I spend much of my time talking to institutions, developers and local authorities about Build to Rent (BTR). Increasingly, though, I am asked a slightly different question: whether an individual can invest in BTR? The answer is yes: there is a growing set of routes for private investors to achieve growth from investing in well managed rental blocks. Furthermore, the policy environment is edging towards favouring large scale, professionally run rental stock.

A market that still wants rented homes

The starting point is demand. Even though more homes have come to the rental market this year, supply still lags well behind demand. Rightmove reported that the number of homes to rent in October 2025 was 9% higher than a year earlier, but stock is still around 23% below 2019 levels, so the gap has not been closed. LRG’s local lettings businesses see the same picture on the ground, with several applicants chasing every available property.

At the same time, investors are getting more ambitious. Paragon Bank’s 2024 Next Generation Landlord report found that landlords with modest portfolios are moving into more complex stock such as HMOs and multi-unit blocks in search of yield and control. That tells us two things. First, investors are willing to learn new models. Second, they recognize that the simple buy to let formula, not helped by the recent enactment of the Renters’ Rights Act, is becoming harder.

BTR sits neatly in the middle of these trends, providing good quality, well located homes for tenants and an high income-producing residential assets.

Why BTR suits a more professional investor

One of the attractions of BTR is that spreads risk. Instead of being exposed to one tenant in one flat, the investor is exposed to a whole building or a defined part of a building with a range of unit types and tenant profiles. Therefor voids are easier to manage, income is more predictable and management is carried out by a professional operator whose interests can be aligned with those of the investor.

For individual investors, that does not always mean owning an entire 150 unit scheme. It can mean participating in a company structure created to hold and operate a block. Or it can mean buying into an office to residential conversion that has been designed for renting from day one. Or joining with other investors to secure tax efficiencies. What matters is that the asset is purpose designed for renting, with services, leasing strategy, energy performance and compliance already built in.

Because BTR assets are designed as a single investment rather than as a collection of unrelated lets, they are also easier to run. Repairs, marketing, renewals and compliance can be handled consistently. That reduces management leakage, which in turn supports yield.

Policy and the November Budget

The Autumn Budget on 26 November 2025 may well increase the attractiveness of BTR. The government has set itself ambitious housing delivery targets and knows that it cannot meet them through homes for sale alone, creating more demand for rental properties as part of mixed tenure developments.

We are hoping that, in using BTR to address the ambitious housing targets, the Chancellor may introduce relief on works that improve energy performance in residential blocks, which would lower capex for BTR schemes. She could ease holding costs for newly completed units and also look again

at transaction costs for larger scale residential acquisitions. None of these measures would be a giveaway, but together they would shorten payback periods and improve the business case for rental led schemes.

If BTR is treated as part of the solution to the housing shortage while other sectors see tighter tax or business rate treatment, then capital will tend to follow the supported tenure. A stable, clearly signalled regime is almost as valuable as a generous one, because it lets investors plan over the life of the asset.

Conclusion

Certainly we at LRG are seeing more of these opportunities reach a size and level of professionalisation that makes them suitable for individuals as well as institutions. Technology is helping, because investors can now view data, track performance and instruct their agent online, while still having access to lettings, block management, planning and valuation advice in one place.

BTR is not a short-term investment, but for investors who want exposure to residential income without carrying all the operational burden themselves, it is becoming a more realistic route. If the Budget later this month tilts further towards rental delivery, that direction of travel will be reinforced.

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