8 January 2025
By Natalie Hughes, Director of Asset Management at Simple Life Homes, part of Sigma Capital Group for Green Street News
The build-to-rent industry has had a fantastic year. Stock now stands at over 120,000 completed homes – a 23% increase on the last 12 months, according to the British Property Federation, and two-thirds (67%) of local authorities in the UK now have BtR being brought forward as part of housing delivery. Demand is far outweighing supply – with over 30,000 enquiries for Simple Life properties in 2024. The sector is continuing to thrive and making vital contributions to the UK’s housing supply.
2025 is set to be even more of a transformational year. With rental reform back on the table, changing stock levels and ambitious housebuilding targets set out by the Government, the BtR industry has a real opportunity to become a mature offering, leading the way when it comes to helping to solve the UK’s housing crisis.
Shifting dynamics: rental reform and tenant empowerment
From parties battling over it at the General Election to the impact assessment published in November, rental reform is a topic that took up much discussion in 2024. Whilst much of this focus centred on the private rental sector, the landlord/tenant dynamic has shifted due to the bill, and tensions will only heighten as it continues to pass through Parliament in 2025.
As the Government looks set to ban no-fault Section 21 evictions by summer 2025, tenants are feeling more empowered than ever and ready to make their voices heard. A trend that we’ll see across the wider rental market is the formation of community groups and forums, as tenants band together to lobby their opinions.
Through greater awareness of reforms and more information being readily available, tenant expectations are shifting. Sigma’s most recent trend report found that 61% of renters expect a response within one hour for an emergency maintenance request, and some tenants now view the need to make a simple maintenance request in the same light as making a complaint. Therefore, the industry needs to establish a balance between resident empowerment and value, whilst managing expectations.
In the age of self-service, tenants will continue to expect not to have to interact with their landlord, as tech continues to evolve. Renters can choose to have access to an app to make maintenance requests and see their contract and compliance documentation. Instant communication will also continue to rise in popularity outside of the private rental sector, as BtR providers set up channels such as WhatsApp, video conferencing and live chat.
The need for rapid upskilling
As rental reform rises to the fore, it’s expected to move quickly. We could be seeing legislation changes in as quickly as six months, and the BtR industry will need to adapt – and fast. Though the sector has a reputation as a professionalised service, tenants will have access to more information than ever before. For example, as part of reform, the Government wants to create a centralised hub for all compliance documents, meaning that landlords will have to get used to keeping that system up-to-date and accurate, or face penalties.
Depleting supply: the impact of high demand and reduced completions
Demand for build-to-rent is high. Data from Savills in 2024 found that it took just 24 days to let a BtR home across the eleven largest UK cities, compared to 32 days pre-pandemic, and at Simple Life, the average period between tenancies is even lower than the national average at just 10 days. However, in 2025, supply looks set to deplete, as the number of completions of BtR units outpace the number of starts.
The market will remain stable overall, but it is anticipated that seasonality may decrease, as rental reform looks set to grant tenants the right to flexible rolling contracts, meaning that not all renters will move out at the same time at the end of their contract.
The big opportunity
Housebuilding is high on Labour’s agenda in 2025, with an ambitious target of delivering 1.5m homes. The recent National Planning Policy Framework review missed an opportunity to incentivise local authorities to deliver build-to-rent through mandated targets. If mandated BtR targets were in place, it would help further accelerate housing deliver and address supply and demand imbalance. However, this now presents a key opportunity.
This ambitious target won’t come without its challenges – many have questioned whether the UK has the housebuilding capabilities to drive this sort of delivery and where the investment is going to come from. Furthermore, the Labour Government will be under pressure and keen to demonstrate progress within just a few years. As many still struggle to get themselves on the housing ladder and delivery for open market sale is always driven by the slower pace of sales, build-to-rent providers can step in and plug the gap. BtR can build fast, at scale and with people lined up to move into the homes as soon as they are built. BTR providers also have the partnerships and streamlined processes in place with housebuilders to deliver the homes needed. However, providers will need to collaborate with authorities and planning departments to drive both investment and fast-paced planning approvals.
Ultimately, BtR is set for a game changing year in 2025. There’s a huge opportunity to support the UK’s housebuilding targets, rising above the pressure of rental reform to deliver a professionalised solution that works for everyone. Providers must continue to educate and promote the build-to-rent sector and its benefits to local authorities, to support the delivery of housing of all tenures to solve the housing crisis.
