The UK’s Construct-to-Lease (BTR) sector recorded greater than £3bn of funding within the first 9 months of 2025, in line with new knowledge from Knight Frank, highlighting continued exercise regardless of wider financial uncertainty.
Over £850m was invested in Q3 2025, a 35% year-on-year improve, sustaining the sturdy momentum seen within the first half of the 12 months when £2.2bn of capital was deployed.
Single-family housing (SFH) accounted for 58% of transactions in Q3 and 62% year-to-date, reflecting sustained demand for rental homes. By worth, SFH represented 40% of quarterly funding, supported partly by subdued gross sales circumstances for housebuilders, which have created alternatives for institutional traders.
Greater than £500m was dedicated to growing multifamily city schemes in the course of the quarter. Knight Frank famous ongoing urge for food for ahead funding large-scale initiatives, although viability pressures proceed to restrict new exercise.
The report additionally highlights rising liquidity in accomplished and operational inventory, with seven multifamily offers finishing thus far this 12 months. Throughout multifamily, single-family, and co-living property, 53 transactions have been recorded in 2025 so far – an 8% rise year-on-year.
Lizzie Breckner, head of BTR Analysis at Knight Frank, stated: “Funding volumes have confirmed resilient within the face of macro challenges, reflecting the sturdy urge for food for purpose-built rental inventory. It’s notably encouraging to see a robust quarter for multifamily funding, which we anticipate will decide up additional.
“Persistently excessive inflation and bond yields are prone to put a dampener on exercise for the rest of the 12 months, as will a component of coverage uncertainty within the run-up to the November Price range. Nevertheless, there’s a important quantity of inventory underneath supply or out there, which suggests it is going to nonetheless be a busy run-in to Christmas.”
In accordance with Jack Hutchinson, a accomplice within the Residential Investments staff at Knight Frank, investor urge for food stays notably sturdy for each single-family and multifamily property. Nevertheless, throughout the multifamily house, challenges round development viability persist, leading to larger liquidity for operational property.
“Within the SFH sector notably, transaction volumes have remained excessive for funding offers and, to an extent, operational inventory because the market matures,” he defined.
“We’re additionally witnessing continued development within the breadth of capital coming into the SFH sector, with a variety of notable new entrants deploying in 2025,” he continued. “This can be a development we anticipate to proceed as traders view SFH as a resilient, income-generating asset class with sturdy long-term demographic tailwinds.”
Lisa Attenborough, head of Knight Frank Capital Advisory, added: “From a capital markets’ perspective, we’re seeing wholesome urge for food from each debt and fairness suppliers for BTR transactions. Lenders stay extremely aggressive for well-structured offers with sturdy underlying fundamentals, notably for stabilised property with confirmed revenue streams. We’re seeing senior leverage transfer past 60% LTV with margins coming underneath 150bps for best-in-class inventory. Institutional fairness allocations proceed to develop from each UK and worldwide traders.”
