Is Construct to Lease (BTR) essentially the most sustainable and safe funding possibility within the present market? Briefly, sure. However the actual reply lies in understanding how BTR has developed – and why the sector now presents a compelling long-term alternative for buyers, builders and occupiers alike.
Altering market circumstances
As soon as a nascent, various type of property funding, Construct to Lease (BTR) has now reached maturity and never solely matches, however exceeds, many advantages provided by different types of funding.
With the overall variety of accomplished items having now surpassed 127,150 (16% in development in previous yr alone: BPF stats), BTR is now a recognised sector in its personal proper. Moreover, it’s attracting a rising base of institutional buyers (up nearly 40% in Q1 2025: CBRE stats).
Unsurprisingly BTR is now an necessary a part of the housebuilding combine in giant cities, making up 14% of latest lodging (Centre for Cities) and is ready to have an necessary position within the authorities’s twelve new cities.
In a broader financial market characterised by volatility – whether or not financial, political or environmental – buyers searching for safety are discovering it in BTR.
This is the results of the evolution of BTR, from a predominantly city, apartment-based mannequin right into a extra various and family-oriented suburban product.
The rise of the BTR suburban group
This newer BTR suburban mannequin, often known as Single Household Housing (SFH), interprets essentially the most profitable options of conventional BTR – service, flexibility {and professional} administration – right into a type extra aligned with the wants of households and people searching for long-term tenure.
This new iteration favours homes over flats, outside house over shared lounges, and areas past town core. It’s a lifestyle-driven product that appeals to maturing Millennials, rising households, and the rising cohort of ‘comfy renters’: folks with means preferring flexibility to possession. In accordance with Authorities knowledge, 44% of renters fall into this class, and plenty of count on to hire for the long run.
The expansion in demand is putting. Households account for 43% of suburban BTR households (BPF stats), nearly double the proportion seen in city BTR schemes. And as working from dwelling and counter-urbanisation developments proceed, the attraction of BTR suburban communities is prone to intensify.
Professionalising the non-public rented sector
On the similar time, the broader non-public rented sector (PRS) is present process structural change because of rising regulation and coverage reform – most notably the Authorities’s dedication to ‘professionalise’ the sector by way of the Renters’ Rights Invoice. The most recent Housing Perception Report from Propertymark revealsthat tenant demand continues to outpace provide, with a mean of 7 candidates for every obtainable property.
Tenant demand continues to rise and there stays a scarcity of obtainable properties to hire. In our personal expertise at throughout all LRG manufacturers, we’ve seen this pattern mirrored nationally.
This shift creates a gap for company landlords to step in and meet the demand – and BTR is properly positioned to take action. With larger high quality properties, built-in providers and long-term administration, BTR schemes meet the wants of right this moment’s renters and regulators alike.
Stability, scalability and repair
For buyers, BTR suburban communities supply a novel mixture of traits: constant demand, sturdy yields, ESG credentials and an aggregated asset construction that delivers scale. The mannequin’s flexibility – permitting for portfolios to incorporate a mix of residential, retail and leisure items – helps each short-term returns and long-term worth.
And crucially, residential property is proving itself as a extra sturdy asset class than business actual property.
At LRG, we’ve seen heightened curiosity from institutional buyers, together with these shifting away from conventional business and retail property. Our nationwide footprint and depth of native market data allow us to help purchasers in assembling and increasing tailor-made portfolios, usually beginning with one-off suburban properties and rising to type cohesive communities.
Supporting ESG and long-term targets
Sustainability and social accountability are excessive on the agenda for institutional buyers. The BTR suburban mannequin, by its very design, allows energy-efficient infrastructure – from warmth networks to sustainable transport. It additionally provides a chance to ship measurable social worth: household housing, long-term tenure, and community-focused providers.
Operators reminiscent of John Lewis have recognised this, searching for to supply high-quality properties underpinned by trusted model values. Their transfer into BTR demonstrates the truth that it is now not an alternate asset, however as a mainstream alternative with a core position in funding technique.
Alternatives for diversification and innovation
There’s additionally appreciable potential for BTR suburban communities to evolve in type and performance. Schemes could combine later dwelling lodging, inexpensive housing, or social infrastructure reminiscent of faculties and GP surgical procedures. Builders are more and more mixing tenures throughout bigger websites to unfold threat and speed up supply, with BTR usually taking part in a pivotal position in enabling placemaking and early income technology.
At LRG, we’re seeing builders reply to those dynamics by retrofitting BTR into masterplans or pivoting mid-scheme to replicate altering circumstances. The mannequin’s capacity to adapt makes it uniquely resilient.
Wanting forward
In accordance with the Affiliation for Rental Dwelling Manifesto2025-26 BTR has the potential to ship as much as 2 million extra, high quality properties and unlock a unprecedented £300 billion in long-term funding for the UK economic system.
The explanations are clear: sturdy and rising demand, beneficial regulatory winds, confirmed investor urge for food, and a product that delivers for each occupiers and funders. The current surge in our personal directions displays that momentum – and factors to a long-term pattern somewhat than a passing alternative.
In unsure occasions, few sectors can supply the identical mixture of yield, safety, and scalability. That’s the reason, as an funding class, BTR – and notably BTR suburban communities – stands out as essentially the most sustainable and safe selection within the present market.
Andy Jones is group director of company gross sales, lettings and BTR at LRG.
