Foreign Investment Surges in UK Build-to-Rent Sector, Outpacing Domestic Capital

The Build-to-Rent (BTR) market in the UK is attracting more investment from overseas than from within the country. In 2024, foreign investors accounted for 51% of all BTR investments, which was up from 42% in 2023. This trend continued in early 2025, marking the fourth straight quarter where international funding exceeded domestic. 

Several reasons explain why the UK BTR market is popular with foreigners:

• Housing Shortages and Growing Demand: The UK doesn’t have enough homes, especially in the rental sector. BTR only makes up 2% of the private rented sector, while in places like Germany and the USA, it’s 41% and 37%. This shows there is a lot of room for growth in the UK BTR market.
• Profitable Returns: The lack of available homes compared to demand has pushed rents higher, creating good returns for investors. In 2024, this sector attracted a record £5.1 billion in investments, making up 13% of total UK real estate investments, a significant increase from 5% in 2021.
• Stable Investments and Future Projects: Investors are interested in current properties and in funding new developments. 

Key deals include Hill & Peabody’s future funding in Dagenham and a partnership between Legal & General and Japanese developer Nomura to build more than 1,000 rental homes in the UK. 

The increasing number of BTR homes illustrates the sector’s growth. By the end of 2024, 123,500 BTR homes were finished in the UK, with an additional 49,000 under construction and plans for another 109,800 homes. 

This expansion is crucial for solving the UK’s housing problems. Overall, the UK's BTR market presents excellent opportunities for foreign investors, driven by strong demand, scarce supply, and appealing returns. As this market continues to evolve, international investors are likely to become even more important in shaping UK housing.