Govt housing targets facing ‘substantial threat’ due to BTR hold-ups

Delays caused by the Building Safety Act, as well as the volatile economic climate, are contributing to a slowdown in starts for build-to-rent projects, according to a report.

Research by the British Property Federation and Savills found that 17,000 BTR homes completed across the country between Q1 2024 and Q1 2025 but that starts on site were down 14%.

There are just 15,000 BTR homes under construction in London, down 18% year-on-year, while starts have also slumped 12% in the regions where just shy of 35,000 build-to-rent properties are on site.

Q1 2025 was the fifth consecutive quarter that new starts had been outpaced by completions, raising concerns for future supply.

Melanie Leech, chief executive of the British Property Federation, said there are various factors causing this.

“Completions remain robust, and planning activity is holding up well, but the sector is facing a real bottleneck in progressing schemes through to construction,” she said.

“Viability challenges, coupled with continued uncertainty around project timelines are slowing momentum just at a time when rental demand is rising sharply. Investor appetite is there but unlocking it will require a concerted effort to support the delivery of BTR homes.”

Leech called for “urgent action” to unblock the backlog of applications waiting for sign-off by the Building Safety Regulator.

“Tackling backlogs and delays at the Building Safety Regulator, combined with planning reforms starting to bed in, could help provide more certainty around delivery,” she said.

“There’s no doubt that the sector’s ability to rapidly deliver high-quality, professionally managed homes will remain a vital part of the UK’s housing mix and the government’s ambitious 1.5m homes target. “

Guy Whittaker, director at Savills said sector sentiment has been “muted” recently as developers and investors struggle to “make multifamily development deals stack up”.

“There are green shoots of recovery, however. The first quarter of 2025 marked the highest Q1 for new investment since 2022, supported by over £500m in urban multifamily forward funds, which will deliver over 1,500 homes once complete.”

Among these deals was L&G, Nest, and PGGM’s acquisition of a 494-apartment scheme in Manchester from Renaker.

“There are significant challenges to future supply though,” Whittaker added.

“Particularly for schemes facing building safety delays. This represents a substantial threat to current housing delivery and puts government housing targets at risk.”