The Association for Rental Living (ARL) has written an open letter to senior ministers calling for immediate Government support for the UK’s Build to Rent (BTR) sector, warning that viability pressures are deterring investment in new rental homes.
The intervention follows the recent withdrawal of the John Lewis Partnership from its BTR property business, a move ARL chief executive Brendan Geraghty (main picture, inset) described as “deeply disappointing news and a real loss for consumers”.
The letter was sent to Housing Secretary Steve Reed, Chancellor Rachel Reeves and other senior housing figures, urging Government to “take sharp notice” of what it called a growing structural viability squeeze across the sector.
ARL argues that a combination of elevated construction costs, higher interest rates, softer yields, expanded Section 106 requirements and cumulative regulatory change has “materially compressed margins” for institutional investors.
REDUCED PIPELINE
For estate agents operating in city-centre and regeneration markets, the warning is significant. ARL says schemes are being slowed, redesigned or withdrawn, potentially reducing the pipeline of professionally managed rental homes.
Without intervention, the body says the consequences will be “slower housing delivery, reduced rental supply, increased affordability pressure and greater reliance on short-term or lower-quality stock”.
The organisation is calling for long-term policy stability, clearer and faster planning pathways and explicit recognition of Build to Rent within planning policy. It also wants housing classified as critical infrastructure and mandatory targets for purpose-built rental homes included in local authority housing targets.
STAMP DUTY RELIEF
ARL further urged the reinstatement of Multiple Dwellings Relief for Stamp Duty Land Tax and a rationalisation of selective licensing regimes.
In the letter, Geraghty says: “Institutional capital is mobile. If UK risk-adjusted returns fall below threshold, it reallocates internationally or into alternative sectors.”
He adds that Build to Rent has already delivered more than 146,000 professionally managed homes and has capacity to deliver significantly more, calling on Government to restore investor confidence and make the UK “a good place to invest.”
THE LETTER IN FULL
Open Letter to Government calling for immediate support for the UK Build to Rent sector
Dear Minister,
The investment viability challenge for Build to Rent housing
We write following the recent announcement of the withdrawal of the John Lewis Partnership (JLP) from its Build to Rent property business, calling upon the Government to take sharp notice of this deeply disappointing news and take immediate action to support the UK Build to Rent sector.
This is not about one business model. It is about viability. A compounding set of regulatory and market dynamics have decimated the viability of investment in building much-needed additional new rental homes.
Across the sector, schemes are being slowed, redesigned, or withdrawn. Elevated construction costs, higher interest rates, softer yields, expanded Section 106 expectations and cumulative regulatory change have materially compressed margins. Institutional capital requires stability to price risk.
Institutional capital is mobile. If UK risk-adjusted returns fall below threshold, it reallocates internationally or into alternative sectors. The recent withdrawal we have witnessed is a symptom of a broader structural viability squeeze affecting BTR investors and developers across the board.
Without intervention, the consequences are clear – slower housing delivery, reduced rental supply, increased affordability pressure and greater reliance on short-term or lower-quality stock.
If we want more high-quality rental housing to contribute to national housing targets, Government must now restore confidence and recalibrate viability by:
Providing long-term policy stability and avoiding further cumulative regulatory layering without economic assessment.
A planning system that supports delivery, with clarity and speed. Housing needs to be classified as critical infrastructure, with Build to Rent explicitly recognised within planning policy, with certainty around affordable housing calibration and accelerated pathways for brownfield regeneration. All local plans must include specific policies on Build to Rent, and mandatory targets introduced for purpose-built rental homes within local authority housing targets.
A proportionate regulatory and tax framework that recognises the economics of large-scale rental. We again call for the reinstatement of Multiple Dwellings Relief for Stamp Duty Land Tax to reflect the economics of large-scale rental delivery, and the rationalisation of selective licensing regimes so that professionally managed blocks are treated proportionately.
Recognising these policy changes take time, we call on Government to publicly recognise and state support for institutional investment in UK BTR and recognise the viability challenges being faced – to give investors greater confidence that the Government is committed to making the UK a good place to invest.
Build to Rent has delivered more than 146,000 professionally managed homes and has capacity to deliver significantly more, including affordable housing at scale. It provides permanent professional management, consistent standards, long-term stewardship and institutional accountability. It is exactly the form of housing the UK should be encouraging.
We stand ready to work with the Government to recognise, redefine and revalue what Build to Rent delivers for society, communities and the housing market as a whole, and to create a housing system that incentivises rather than thwarts institutional investment. Let’s seize the opportunity together.
