OakNorth specifically anticipated that affordability pressures would ease, driven by a combination of real wage growth and continued reductions in mortgage rates.
The report reads: “Following the UK’s BTR sector robust growth in 2024, we anticipate further growth throughout 2025, with a strong pipeline of projects set to meet the growing demand, driven by substantial investment, regional market expansion, and increased international interest.”
Despite increases in UK private rental yields and greater support from the government, OakNorth highlighted the challenge the Building Safety Regulator (BSR) had caused housing delivery in the past six months.
This led to several high-risk buildings (HRB) projects stalling, leaving completed homes empty and putting developers under greater strain.
OakNorth, in the report, said: “As a result, BTR applications fell 41 per cent in Q4 2024. While action is being taken to address the delays, including a further £2 million being allocated to the BSR by the government, we expect these issues to continue to put a strain on HRB development throughout the remainder of 2025.”
Highlights:
- A report by OakNorth concluded that BTR activity is expected to return to pre-pandemic levels this year
- Factors include stable house prices, falling mortgage rates, and an improving economic backdrop
- Buyers are likely to stay price-conscious due to greater choice in the market
