The UK's build-to-rent (BTR) sector continues to attract long-term institutional investment despite mounting viability challenges that are slowing the delivery of new schemes, according to Knight Frank's latest Build to Rent Market Update.

The consultancy said almost 6,700 BTR homes were completed during the first half of 2026, with London and Tier 1 regional cities such as Manchester and Birmingham accounting for nearly half of all new delivery. However, development activity is becoming increasingly concentrated in these stronger markets as rising construction costs and higher financing expenses continue to affect scheme viability elsewhere.

Knight Frank reported that more than 166,000 BTR homes have now been completed across the UK, with over 50,000 currently under construction and a further 126,000 in the planning pipeline. Despite this substantial pipeline, new development starts have slowed significantly as developers and investors become more selective.

The report suggests regional markets face the greatest challenges, with viability pressures making it more difficult for schemes to move from planning into construction. Knight Frank warns that unless development activity accelerates, annual completion levels are likely to decline later this decade despite continued investor appetite for the sector.

The consultancy said long-term fundamentals remain positive, supported by strong rental demand, constrained housing supply and continued institutional interest in professionally managed rental accommodation. However, unlocking future growth will depend on improving development viability and bringing more projects forward.