UK: Knight Frank’s Single Family Housing (SFH) 2025 report reveals that 2024 saw a record 31 SFR nationwide, up 24 per cent year-on-year.
According to Knight Frank, investment into SFR reached £1.8 billion last year, taking the total to more than £4.4 billion invested since 2020. Due to this significant influx of capital, SFR is now being developed in 132 local authorities across the UK.
The current UK pipeline includes 14,353 complete and operational SFR homes across 212 schemes, with a further 11,262 units under construction. In 2024 alone, more than 3,000 SFR homes were completed.
Jack Hutchinson, a partner in the residential investments team at Knight Frank, said: “The size of the opportunity within single family housing is immense. With 3.1 million renters already living in suburban households across the UK, and just 0.2 per cent of current privately rented homes operated by institutional investors, we’re only scratching the surface. Our projections suggest the market could absorb more than one million SFR homes at full maturity. Given the size of the demand pool, we expect SFH delivery to eventually overtake multifamily as the market continues to evolve.”
In 2024, 48 per cent of SFH transactions were forward commitments, up from 24 per cent in 2023 and equal to the number of forward funds agreed over the year. Just three per cent of deals were for stabilised portfolios.
Last year 71 per cent of total spend was targeted at the south-east and east of England.
Oliver Knight, head of residential development research at Knight Frank, said: “There is a significant supply shortfall in the rental market, with the number of houses available to rent at the end of 2024 around 30 per cent lower than pre-pandemic. SFH can help to replace some of these homes being lost from the rental market, though current rates of delivery aren’t making a dent. For investors and operators that has meant a period of above average rental growth, as well as strong occupancy and lease up in existing and new schemes.”
Data from the National Residential Landlord’s Association suggests that 46% of landlords intend to sell properties within the next 12 months, up from 31 per cent at the beginning of last year.
Knight added: “Partnerships have emerged as the main route to market for SFH investors to achieve scale quickly, and with over one million private plots on more than 9,000 housing-led sites currently under construction or in planning across England, there is huge potential to unlock SFH supply just from sites which are already in the planning pipeline.”
According to the firm’s survey of 50 volume and SME housebuilders, 60 per cent said they had already sold units to multifamily or SFR investors.
Hutchinson concluded: “This presents a strategic opportunity for institutional investors to take a leading role in housing delivery, as housebuilders increasingly adopt multi-tenure approaches across their portfolios.”
The report identifies growing international investor appetite, with £1.06 million of cross-border capital invested in SFR in 2024 alone – a 45 per cent year-on-year increase. Knight Frank’s survey of nearly 60 major investors across UK Living Sectors found that 71 per cent plan to target SFH over the next five years, up significantly from 41 per cent currently invested.
Lisa Attenborough, head of Knight Frank Capital Advisory, said: “Interest rates have stabilised although they remain stubbornly high. That said, we are seeing peak liquidity in the debt market, which is driving down margins, resulting in a lower all-in cost of debt. There is significant appetite to invest into SFH from global capital – this appetite is matched from the debt market – so much so, that looking ahead, we anticipate innovative funding structures to emerge that better align with investor requirements and maximise returns.”
One the day the report was published, the Association for Rental Living (ARL) highlighted the BTR sector’s role in addressing the housing shortage and called on the Chancellor to “pull the Build to Rent lever” by reinstating Multiple Dwellings Relief.
ARL CEO Brendan Geraghty said: “A year since the previous Chancellor announced the abolition of Multiple Dwellings Relief, the Association for Rental Living called on this Chancellor, in her Spring Statement this week, to ‘pull the Build to Rent lever’ to meet housing delivery targets and support economic growth by reinstating Multiple Dwellings Relief. The impact of the abolition of Multiple Dwellings Relief, which came into effect as of 1st June 2024, on Build to Rent has been significant wiping up to £800 million off valuations in one fell swoop and continuing to impact the viability of delivering new homes to rent today. With the Build to Rent sector’s ability to deliver two million additional, high-quality homes to rent, we urge the Chancellor to take every opportunity to pull the Build to Rent lever, with the reinstatement of Multiple Dwellings Relief a clear choice to boost investor confidence and deliver the new homes so vocally desired by the Government.”
