Institutional investment in London’s build-to-rent residential sector reached a record £4.8 billion in 2025, according to data published by the British Property Federation this week, with a further £6 billion committed to schemes currently in planning or under construction that will deliver approximately 50,000 new homes across the capital over the next five years. The figures underscore a fundamental shift in how new homes are being delivered in London, with professional landlords and long-term investors increasingly filling the gap left by traditional housebuilders who have retreated from the capital amid rising costs and planning uncertainty.
Build-to-rent developments — purpose-built blocks of flats designed for long-term institutional ownership and professional management, typically offering amenities such as concierge services, gyms, co-working spaces and flexible lease terms — have moved from a niche product to a mainstream component of London’s housing supply over the past decade. The sector now accounts for approximately 15% of all new homes completions in Greater London, a proportion that industry analysts expect to reach 25% by the end of the decade.
Major investors active in the sector include Legal & General, Invesco Real Estate, Greystar, Quintain and Grainger, alongside a growing number of international institutional investors from North America, Europe and the Middle East who view stabilised UK residential assets as attractive in the context of global portfolio diversification. Average gross yields on completed build-to-rent assets in prime London locations are running at approximately 4.2%, which compares favourably with prime office and retail assets given the perceived lower obsolescence risk of well-located residential property.
The sector’s growth has not been without controversy. Housing campaigners and some local politicians have argued that institutional build-to-rent developments, which by definition do not cater to owner-occupiers, fail to address the underlying homeownership aspirations of many Londoners and contribute to a culture of “generation rent.” They also point out that affordable housing provision within build-to-rent schemes has frequently fallen below the levels specified in planning policy, with developers successfully arguing that higher specifications and management costs justify reduced affordable housing contributions.
The government’s Planning and Infrastructure Bill, currently before Parliament, contains provisions intended to accelerate planning decisions for large residential schemes, including build-to-rent developments. Housing Secretary Angela Rayner has set a target of 370,000 new homes per year across England, and industry figures suggest that build-to-rent will need to contribute significantly to that total if the government’s ambitions are to be realised.
— Edward Blackwell, London Capital Post
