Single-family housing attracts record capital as sector shifts away from high-density schemes
The UK build-to-rent (BTR) sector attracted £4.7 billion of investment in 2025, a fall of 9.1% from the record £5.1 billion recorded in 2024 but still around 23% higher than the 10-year annual average, according to Knight Frank’s Q4 2025 UK Build to Rent Market Update.
Single-family housing (SFH) represented 55% of total investment over the year, the first time it has overtaken multifamily as the largest segment of the BTR market by capital deployed.
In the final quarter of 2025, Knight Frank reported £1.7 billion of transactions, indicating a firmer end to the year than many had anticipated amid wider macroeconomic pressures on real estate investment.
Single-family leads investment and gains share of delivery
Investment into single-family housing reached a record £2.6 billion across 44 transactions in 2025, underpinned by rising demand from investors for lower-density, predominantly suburban rental assets.
The UK’s operational BTR stock rose to 158,205 completed homes in 2025, an increase of 16% year on year. A further 51,755 homes are under construction, which Knight Frank said places the sector on track to pass 200,000 completed homes in the coming years.
Around 22,000 new BTR units were delivered in 2025, about 20% below the 2024 peak. Single-family homes accounted for 25% of all BTR completions, the highest share yet for this part of the market.
By contrast, the delivery of multifamily and co-living schemes declined by 28% and 33% respectively, with viability constraints and regulatory issues continuing to weigh on higher-density projects. Knight Frank expects just under 24,000 BTR completions in 2026, suggesting a modest increase in output compared with 2025.
Demand for purpose-built rental housing
“Our latest analysis shows a sustained and growing appetite for purpose-built rental housing, with £1.7 billion invested in Q4 alone,” said Lizzie Breckner (pictured right), head of BTR research at Knight Frank. “While annual volumes have softened, reflecting recent policy uncertainty alongside pricing, debt and development pressures.”
Breckner added that sentiment in the sector is gradually improving. “The UK's BTR stock continues to expand at pace, growing 16% over the past year, and the strength of the pipeline means the sector is on course to exceed 200,000 operational homes within the next few years.”
Market dynamics and implications for SFH
According to Jack Hutchinson, residential investments partner at Knight Frank, 2025 has been a strong year for BTR despite wider market headwinds.
“Multifamily continues to lead on delivery, but it has been a milestone year for SFH, which has taken the top spot for annual investment for the first time at £2.6 billion,” Hutchinson said. “Record capital inflows and its growing share of completions underline investor confidence in the depth and resilience of the SFH sector.”
Notable Q4 2025 transactions cited in the report include the £630 million disposal of PRS REIT and the sale of the TPG/Gatehouse portfolio, both of which illustrate rising investor interest in single-family portfolios of scale.
Debt market conditions and pricing
Lisa Attenborough, head of Knight Frank Capital Advisory, said 2025 saw a fundamental shift in the real estate debt market.
“High levels of liquidity meant that the balance of power shifted towards borrowers,” she said. “With debt supply at its highest level in more than a decade, we expect to see continued margin compression for best-in-class deals throughout 2026.”
According to the update, margins for stabilised BTR assets are now generally below 150 basis points, with single-family housing assets priced close to that level at around 150 basis points. “We are seeing huge lender demand for Living sector transactions, both development and investment,” Attenborough noted.
For mortgage professionals active in buy-to-let, BTR or residential investment finance, the shift towards single-family assets, combined with continued lender appetite and tightening margins, may influence product design, underwriting assumptions and long-term portfolio strategy across both institutional and specialist lending segments.
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