The UK's regional build-to-rent (BTR) pipeline is on the brink of collapse due to mounting viability pressures, with thousands of desperately needed homes in danger of being left unbuilt. According to Knight Frank's latest market update, a significant divide has emerged between major urban centres and smaller towns, with development challenges becoming increasingly acute outside the largest cities.
So far this year, just over 6,700 BTR homes have been completed nationwide, but nearly half of these new deliveries have been concentrated in London and Tier 1 cities such as Manchester and Birmingham. In contrast, Tier 2 cities like Nottingham, Liverpool, and Sheffield accounted for a mere 14% of completions, with a further 14% delivered across smaller towns and other regional locations.
Knight Frank highlights that viability pressures are most pronounced away from the largest urban hubs. Many regional schemes are now dependent on securing grant funding, greater flexibility in Section 106 agreements, or modifications to affordable housing requirements to become financially viable and proceed. This situation is leading to a bottleneck in much-needed housing supply in these areas.
Lizzie Breckner, head of residential investment research at Knight Frank, noted that while overall supply continues to rise, the disparity between major cities and regional markets is widening. She explained that rising costs and tighter development economics are making it increasingly difficult to bring forward new projects in many regional areas. This trend is likely to put further pressure on multi-family housing delivery unless these underlying challenges are addressed.
Despite these development hurdles, investor confidence in the BTR sector remains robust, with UK investment hitting a record £2.08 billion in the second quarter of 2026. The total completed housing stock in the sector has also continued its upward trajectory, increasing by 17% year-on-year to reach 166,359 homes. Furthermore, almost 50,000 homes are currently under construction, with over 125,000 more progressing through the planning system – a strong pipeline that could be compromised if viability issues persist.
Nick Pleydell-Bouverie, head of residential investment at Knight Frank, emphasised the enduring strength of the investment case for BTR. He pointed to the persistent demand for high-quality rental properties outstripping supply in numerous markets, which in turn supports high occupancy rates and robust rental growth across the sector. The crucial challenge now is ensuring that development opportunities are financially sound so that vital new supply can be delivered to meet this demand.