Build-to-Rent resilient as housing delivery slowdown deepens, says Savills

Build-to-Rent is expected to remain one of the most resilient parts of England's housing market over the next five years, but research from Savills suggests the sector is not immune to the development pressures affecting housing delivery across the country.

The consultancy forecasts annual Build-to-Rent completions will average 14,500 homes between now and 2029/30, only modestly below the 15,500 homes delivered annually over the previous five years. While the decline is relatively limited compared with other housing tenures, it highlights how planning delays, rising construction costs and viability challenges are now affecting almost every part of the residential development market.

The findings form part of a wider forecast that predicts housing delivery in England will fall significantly short of the Government's ambition to deliver 300,000 homes a year. Savills expects completions to average just 167,500 homes annually over the next five years, with output falling to little more than 150,000 homes a year during 2026/27 and 2027/28.

According to the report, development viability remains the single biggest challenge facing the sector. Build costs have increased by 17.5% over the past four years, while house prices have risen by only 4.5%, making many schemes increasingly difficult to bring forward.

Planning constraints are also continuing to impact delivery. Annual planning consents for new homes have fallen by 39% over the past three years, while housing starts are down 31%, creating a much thinner pipeline of projects moving through the development process.

The research highlights varying performance across different housing tenures.

Unsupported private sales are forecast to average 102,700 completions per year over the next five years, down from 107,500 over the previous five-year period. Grant-funded affordable housing is expected to average 29,200 homes annually, while Section 106 affordable housing delivery is forecast to fall to around 21,000 homes a year, representing a 19% decline.

Against this backdrop, Build-to-Rent continues to demonstrate relative resilience, underpinned by long-term institutional investment and sustained demand for professionally managed rental housing.

However, Savills cautions that the same headwinds affecting the wider housing market are increasingly influencing BtR delivery. Rising construction costs, affordability pressures, planning delays and infrastructure requirements are all impacting project viability, despite continued investor appetite for the sector.

The report also points to some early signs of improvement within the planning system. Residential planning applications increased by 44% over the past year, while appeal success rates have improved, suggesting recent planning reforms may be beginning to have an effect.

However, Savills notes that it could take at least 18 months before these improvements translate into higher levels of housing delivery on the ground.

The consultancy believes measures aimed at supporting buyer demand could also help stimulate broader housing delivery. It estimates that a new support scheme could help deliver an additional 92,000 homes by 2029 and raise annual completions to around 198,000 homes by 2028/29.

While still below Government targets, such an increase would help maintain housing delivery at levels more consistent with the long-term average.

For the Build-to-Rent sector, the findings reinforce its position as one of the more stable segments of the residential market. However, the report makes clear that without improvements in planning, viability and delivery conditions, even the sector's relative strength may not be enough to offset the wider slowdown affecting housebuilding across England.