Data from the British Property Federation (BPF) shows a 14% increase in BTR homes in planning, under construction or completed during 2022, rising from 212,916 to 242,548.
But this represents a slow-down in growth for the BTR sector, which has increased by an average of 28% per year since 2017.
In the fourth quarter of 2022, BTR construction starts were 24% lower than the same period in 2021 – 15,600 in Q4 2022 compared to 20,400 in Q4 2021.
However, the pipeline remains ‘robust’, the BPF said, with 113,379 units in planning, up 14% year-on-year.
Ian Fletcher, director of policy at the British Property Federation, said: “The build-to-rent market had continued to grow over the past 12 months but we are seeing a slowdown in activity as inflation and an uncertain economic backdrop makes it more difficult to deliver.
“In the long-term, we expect the sector to continue to expand as a vital component of overall housing delivery, but government must be careful not to stymie its progress. The watering down of national housebuilding targets may mean there is less urgency around allocating land for residential development, and there is already evidence that the rent cap introduced in Scotland, and being debated in Bristol, is deterring investment. The BTR sector has a major role to play in urban regeneration and levelling up and we cannot take its success for granted.”
The analysis was conducted in collaboration with estate agent Savills. Guy Whittaker, an associate at Savills, added: “Investment appetite for build-to-rent was resilient in 2022 and resulted in £4.3bn of investment, a fourth consecutive record-breaking year. That said, it is clear that the sector is not immune to headwinds facing the construction industry, as shown by a Q4 slowdown in starts and completions.
“With weaker home buyer demand, residential development activity is likely to be subdued in 2023. Build-to-Rent can offer an alternative exit strategy for developers looking to maintain sales rates and de-risk their pipelines. The BTR sector can therefore play a key role in maintaining construction output and support housing delivery nationwide.”
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