Another record year for Single Family Housing
Introduction
- £3.17 billion was invested in UK Single Family Housing (SFH) in 2025, another record year.
- The emergence of Local Government Pension Schemes (LGPS) as direct major players means there is greater appetite to purchase stabilised stock, a trend we expect to continue in 2026. The sale of PRS REIT to a joint vehicle backed by Northern LGPS and Local Pensions Partnership is the largest transaction to date and has reset the market’s definition of scale.
- Our annual review of the market shows a broader range of investors now targeting the SFH sector, many of whom are now comfortable co-locating in the same towns and on the same masterplans.
- Appetite amongst housebuilders to sell homes to SFH investors has increased, and our survey of major housebuilders shows that, for many, this is now a long-term strategy.
- Our analysis shows that in the right location, nearly a third of a site could be sold to SFH investors, meaning there is considerable supply headroom on many large sites across the UK.
- There is now better alignment between investors and housebuilders on unit types. Many investors have pared back their sustainability requirements and will still purchase sites that use gas.
- SFH will show resilience in a new regulatory landscape, which includes navigating the Renters’ Rights Act in England.
- Exemption from rent control regulation presents an opportunity for investment in Scotland.
Single Family Housing leads BTR investment in 2025.
SFH enjoyed another strong year in 2025, accounting for 59% of all Build to Rent (BTR) investment, compared to only 6% in 2019. Investment volumes have grown from just £544 million in 2022 to over £3 billion in 2025.
The sector is expanding nationwide, with an SFH scheme now in nearly 40% of Local Authorities – a third of which gained their first SFH homes in 2025.
Stock aggregation remains a cornerstone of activity. Among the prolific buyers were Kennedy Wilson and Lloyds Living, acquiring around 3,500 SFH homes between them in 2025. These acquisitions were secured via deals with major housebuilders, highlighting the willingness of that group to transact increasingly large numbers of new homes.
The sector also attracted new entrants in 2025, such as Aberdeen and Long Harbour, who both completed their first SFH purchase.
Appetite to acquire stabilised portfolios has risen. Lloyds Living bought 610 homes from Start Living, a Gatehouse and TPG-backed vehicle, taking the former’s total portfolio to over 7,500 homes. Additionally, the opportunity to purchase existing stock is growing. Leaf Living, set up by Blackstone and Regis in 2021, has now begun to sell assets, including 179 homes sold to Matter Real Estate. The potential sale of its entire portfolio in 2026 will be a key test of the sector’s strength.
Confidence can be taken from the landmark acquisition of PRS REIT (with 5,478 homes), notably bought using Local Government Pension capital. This represents the largest BTR transaction to date and has reset the market’s definition of scale.
With significant funds to deploy, long-time horizons for ownership, and a willingness to invest directly or as a limited partner, the increasing interest in SFH from pension funds and other long-term capital has the potential to transform investment in the sector.
New Capital
SFH is undergoing a major shift as growth in scale and investment volumes attracts a wider array of investors, including major pension funds.
The pool of capital targeting SFH is diversifying
With greater involvement from banks and pension funds, the profile of investors in SFH has begun to change.
The cause of the shift is partly structural. Portfolios built by private equity through opportunistic purchases have matured and stabilised, creating value by offering aggregated, stabilised stock to long-term capital, from which they can leverage further growth, with the benefit of day-one income.
This has attracted more Core and Core+ capital, whose risk profile means funding development isn’t a natural fit.
With £400 billion of assets, LGPS could play a crucial role in direct UK housing investment. There is a natural alignment here, as pension funds require stable, predictable returns over the long term and rented housing, which continues to be in chronic undersupply, provides inflation-matching income.
This has also been recognised internationally, as Korea’s National Pension Service is now actively investing in UK SFH with Long Harbour.
Why is SFH a good fit for pension funds?
Pension funds are taking an increasing interest in UK SFH. The emergence of established portfolios, longer-term evidence of rental performance, and depth of tenant demand has changed perceptions about the sector’s risk profile, attracting more long-term capital. Ongoing affordability challenges around home ownership in the UK further bolster the appeal of the sector.
Beyond this, for many pension funds, the characteristics of SFH align not only with their investment strategies and desired return profiles, but also their wider concern for social impact. For LGPS in particular, investments into assets such as housing and infrastructure can offer diversified, inflation-linked returns while simultaneously addressing housing need and regeneration in the places where the fund’s members live.
Several LGPS already have exposure to residential assets (mostly affordable housing) in the UK, usually investing in housing with external partners and capital.
Q4 2025 saw a step change for direct investment by LGPS. The acquisition of PRS REIT signalled to the market that there is appetite among this group to purchase thousands of homes in a single transaction.
Beyond its sheer size, this deal highlights how pension fund money, including LGPS, could reshape the sector more broadly.
The attractiveness of the SFH sector to pension funds is only likely to grow further. Increasing pressure to invest directly into UK assets and infrastructure, and the political drive to increase housing delivery, will mean a greater role for LGPS and wider pension capital.
This will have knock-on benefits for the rest of the market. It provides greater certainty for aggregators that there will be capital looking to acquire stabilised portfolios, thereby reducing their exit risk.
It also allows those already invested to recycle capital in their current portfolio to fund future development. This suggests a maturing investment market, and we think operational trades will continue to be a key part of investment volumes this year.
Savills Single Family Housing Housebuilder Survey
Savills Research recently conducted a UK SFH survey, speaking with 10 housebuilders that have collectively sold over 15,000 new homes to investors in the past five years. Throughout this paper, we highlight the key findings, including housebuilder appetite for sales to SFH investors and their scale aspirations.
From Stop-Gap to Strategy?
Housebuilders are embracing SFH to boost sales rates, strengthen long-term delivery, and enhance returns on capital.
It is no secret that the new build market has faced significant challenges in recent years.
Elevated inflation and interest rates, the end of Help to Buy, and a weak economic outlook have all weighed on owner-occupier appetite to purchase new homes.
Declining private sales rates meant more developers and housebuilders looked for additional sales routes, leading to a rise in bulk sales into the private rented sector (PRS).
Housebuilders’ views of bulk sales have evolved. Now, many housebuilders consider SFH not just as a solution to low sales rates, but as a core part of their strategy, both to increase housing completions and enhance their return on capital.
Many housebuilders have moved away from a pure margin-driven business model to a Return on Capital Employed (ROCE) approach. This switch is because they “employ” less of their own capital by selling homes to SFH investors, and the benefits from accelerated delivery, higher absorption rates and lower capital requirements mean that a profit margin approach does not reflect the true returns.
This is especially the case in high-value markets across southern England, where private sales rates are slower.
Most housebuilders we interviewed (80%) said they wanted to further increase the number of homes they sell to SFH investors over the next five years.
Many housebuilders, including some of the largest PLCs, have already restructured their businesses, establishing partnership arms to deliver purpose-built rental homes. More will likely follow.
How many homes they deliver depends to some extent on the strength of the private for sale market and the prevailing market conditions, but the direction of travel in the medium term is clear: the number of SFH is likely to grow, as housebuilders integrate delivery of rental homes into their ROCE-driven business models.
Over the past five years (2021–2025), just 10% of housebuilders planned to sell more than 15% of their new homes to SFH investors. This has now substantially increased. Over the next five years (2026–2030), 50% of housebuilders we surveyed intend to sell more than 15% of their new home deliveries to SFH investors, marking a step change in housebuilder strategy.
All housebuilders we surveyed agreed that the best way to increase sales to SFH investors is to sell to multiple investors, rather than one strategic partner – a preference borne out by our investment data, which shows that the most active investors are rarely the same year to year.
There was also alignment on the deal type. Most housebuilders agreed that forward funding is the preferred route to market (less capital-intensive for them), and while the benefit of a formal long-term partnership was clearly articulated, there was also the recognition that, in practice, there will still be a place for ad-hoc forward commitments on sites already underway.
Forward funds allow housebuilders to improve cash flow, receiving staged payments throughout the construction period. This helps mitigate sales/exit risk, but there can be downsides of fixing a sales price early: build cost inflation and missed house price inflation during the build, which could otherwise be captured during a sale to a private individual. For this reason, SFH can be more effective on some sites than others, and each site must be considered against local market dynamics.
Why SFH works for Housebuilders.
A major appeal of SFH is the ability to recycle invested capital quickly. This is particularly true on high-value sites, where sales rates can be slower, and large sites, where there is a significant volume of homes to offload.
Selling an early parcel to an investor on a large site recovers cash for the rest of the site to fund future phases, infrastructure and placemaking. Gateway plots at the entry to a site are good locations, as they can be built and sold quickly without too much additional infrastructure.
90% of housebuilders see sales to SFH investors as a means of increasing speed of delivery and ROCE.
Guy Whittaker, Associate Director, Residential Research
This rationale is likely to become more important as the planning system shifts towards greater scale. Over the past decade, a growing share of housing consents have been located on larger sites. Between 2015 and 2017, around a third (32%) of homes granted full planning consent were on sites of 250 homes or more. By 2022, that figure was nearly half, at 47%. The growth in the largest sites (500+ homes) has been especially pronounced – nearly doubling, from 11% to 20% over the same period.
Scale is a consideration for housebuilders. 90% of housebuilders surveyed agreed that ‘increasing total housing output’, ‘increasing speed of delivery’ and ultimately, ‘increasing ROCE across the business’ are reasons to increase sales to SFH investors.
Meanwhile, 80% agreed that a key draw was to ‘diversify sales routes’, offering an additional source of demand beyond sales into the private for sale and Affordable housing markets.
To a lesser extent, the ability to open more non-competing outlets is a reason to increase SFH sales. For some housebuilders, this is a key performance metric in annual reporting.
Increasing SFH delivery can ultimately help to fill the gap left by Buy to Let (BTL) investors, many of whom have stopped growing their portfolios. Some are selling out of the sector altogether, and we estimate that in the three years to May 2025, the PRS in England witnessed a net contraction of 354,000 homes. To put this into context, the SFH and Multifamily (MF) sectors together added 55,000 homes over the same period.
Collaboration between housebuilders and investors is needed in order to replace homes lost from the market and meet growing rental demand.
SFH investment can help the UK Government increase housing delivery.
SFH has the potential to play an important role in unlocking higher volumes of housebuilding in the UK, particularly at a time when sales rates are weaker and there are limited prospects for significant government-backed support.
Previous Savills analysis found that constrained affordability and the end of Help to Buy have caused demand for new homes from owner-occupation to fall sharply in recent years, to levels comparable to the height of the Global Financial Crisis in some regions. Given the reliance of housebuilding on sales of new homes to individual buyers, low sales rates pose a real threat to the government’s ambitions for housing delivery.
SFH’s contribution to total housing delivery is currently modest, at just 1.3% of new homes delivered in England and Wales in 2025.
A more mixed-tenure approach to housing delivery could support greater capacity. This is because SFH is complementary to open market sales, and the homes are not competing for the same demand pool. It allows housebuilders to continue to deliver homes to buyers alongside investor sales.
Ultimately, this leads to sustainably higher levels of housebuilding overall (including much-needed quality rental stock), even in more challenging market conditions.
Is it Here to Stay?
A majority of housebuilders now see sales to investors as a long-term strategy.
Amid a sluggish housing market and slower sales, housebuilders have turned to selling homes to institutional investors in greater volumes. We estimate that over 24,000 homes have changed hands in the last five years, some of which remain under construction.
How long will this continue?
From our survey responses, there is little evidence that SFH is seen by housebuilders as just a temporary fix for low sales rates. 70% of respondents stated that they envisage sales to SFH investors as a long-term alternative exit option within their delivery strategy, rather than just in the short term (1–2 years) or in the medium term (3–5 years).
Unanimously, every housebuilder we surveyed ‘considers sales to SFH investors when acquiring land’. This clearly signals a shift in approach, from more ‘reactive’ sales to proactively planning SFH into housing delivery strategies from the start.
Some housebuilders are even having sales discussions with investors back-to-back with a land purchase, demonstrating a willingness for investors to engage early on sites in the best locations.
Where there is indecision around pricing or speed of sale to private individuals, that’s where sales to investors comes in. Although carving out a parcel of homes for an investor must be considered in the context of the wider site.
There is a balance to be struck between meeting demands from investors and ensuring the remainder of the site is not compromised. For example, housebuilders need to ensure that once homes have been sold to an investor, the remainder of the private mix is still commercially viable.
In practice, this means unit types and site density. Investors are led by returns, and the most efficient units from a rental perspective on a site tend to be two- and three-bedroom houses. On the one hand, this represents a great opportunity to sell a large proportion of homes quickly. But offloading too much of this stock to investors and leaving a high proportion of four- and five-bedroom houses for private sales represents a risk, given the higher pricing and slower sales rates for these homes.
For this reason, a growing number of housebuilders are planning sites with SFH investors in mind from the start. This includes specifying unit types for investor sales, and 60% of the housebuilders we surveyed have done so already.
Greater collaboration between investors and housebuilders might have arisen as a response to slower private sales rates, but there are strategic advantages to increasing SFH sales to investors. Our survey demonstrates that there has been a step change in housebuilder attitudes, and many have pivoted their business models to incorporate SFH for the long term.
Better Together?
Growing evidence of investor co-location on large sites.
Strong and resilient demand continues to underpin the SFH sector, with investors increasingly recognising its stability and appeal to long-term renters. Typically, the newest and best quality stock in a location, SFH can achieve rents above prevailing market levels; this is particularly the case in the strongest suburban markets, where rental premiums can be achieved while remaining affordable relative to local incomes.
In some locations, these conditions also create scope for multiple investors to operate successfully on the same site, supported by deep tenant demand and sustainable rental headroom.
This is a growing trend as we see more investors co-locating within the same towns and even on the same master plans. Not every site will allow this, but in the best locations there can be several investors within touching distance. Our analysis of the SFH development pipeline shows that on several large sites, housebuilders have sold many homes to SFH investors.
Great Haddon and Whitehouse lead the way with six and five SFH transactions to date, respectively. Given the level of investor appetite, we expect more sites to follow in the coming years. Five more sites have seen at least three SFH transactions.
On average, 10% of consented homes on these large sites have been sold to SFH investors. At Darwin Green (Cambridge) and Forster Park (Stevenage), the share has reached 23%. PRS REIT forward-funded 29% of Bilston Urban Village (Wolverhampton) during 2020/21, and the pace of letting kept pace with delivery. This suggests that in the right location, nearly a third of a site could be sold to SFH investors and means there is considerable supply headroom on many large sites across the UK.
Investors can take confidence where another has proven the strength of demand, which can make rental underwriting easier. But this requires a considered delivery and lease-up strategy to ensure you are not directly launching homes alongside another investor, to maximise leasing velocity and pricing.
One way to overcome this is to ensure your homes are differentiated, which in practice could mean different house types, specifications, and price points.
Market Expansion
Growing demand and widespread undersupply in suburban areas.
We expect SFH portfolios to spread across the country, supported by a long-term demand trend. Between the 2011 Census and 2023, Experian data indicates that the number of households renting privately in suburban locations grew by 24%, far outpacing both owner occupation (6%) and even the growth of private renting in urban areas (19%). Most PRS households in the UK live in suburban areas: an estimated 2.2 million in 2023, compared with 1.9 million in urban areas.
The shift in investor focus has been supported by rental growth. Over the past five years, average rents grew by 37% across the UK. Average house prices, meanwhile, grew by 20%. This has supported investor bids for new homes and improved development viability for housebuilders in markets where rents are growing faster than house prices.
However, annual rental growth has now started to slow. In 2025, average UK rents grew by 2.0%, yet three-quarters (74%) of Local Authorities still saw rents grow faster than house prices, owing to weak house price growth. It is this disparity which is offering investors a window of improved viability. A tight supply picture supports further rental growth. Compared to 2018–19, the number of houses to rent (as measured by available rental listings on property portals) was 16% lower in 2025. Fewer properties to rent is consistent across two-, three- and four-bedroom houses across all regions.
With greater development viability, investors are looking to move into Southern regions with resilient rental demand. There is a natural alignment here, as major towns and cities in the south of England are typically those in greatest need of new supply, owing to higher house prices and lower affordability.
While the bulk of completed SFH stock is still concentrated in the Northern regions, particularly the North West, that balance is gradually shifting as new supply increasingly favours markets in the South and Midlands.
The South East, East of England and East Midlands have emerged to become the three regions with the largest SFH pipelines. Once the identified planning pipeline is delivered, each region will have 5,550, 4,700 and 4,300 SFH homes in operation, respectively.
This expanding tenant base represents a strong fit for SFH. Rising suburban demand, combined with the faster growth of private renting, offers a compelling opportunity for the sector to deliver stability and long-term growth. The growing scale and momentum of suburban renting make SFH well-positioned to meet demand for higher-quality, professionally managed family homes in the locations where private renting is expanding most quickly.
Regulation
SFH will show resilience in a new regulatory landscape. It is well-placed to navigate the Renters’ Rights Act in England, while exemption from Scottish rent control regulation will attract greater investment.
The Renters’ Rights Act (RRA) will reshape the PRS in England. At the heart of the legislative overhaul is the abolition of Section 21 “no-fault” evictions, ending the ability to remove tenants without grounds. Fixed-term Assured Shorthold Tenancies (ASTs) will be replaced with rolling ‘periodic’ tenancies, while rents can only be increased once a year, in line with market rent, which will alter the frequency and rate of rental growth.
The impact on SFH investors is likely to be comparatively limited. From the point of view of operators and investors, the burden of compliance and other associated risks are expected to be materially lower for this segment of the market than for the wider PRS. Operators are already aligned with much of the new legislation. For example, the RRA makes it illegal to discriminate against tenants with children or pets. The impact will be minimal as families are a core source of demand for SFH.
Further underpinning this relative resilience is the tendency for households in SFH schemes to remain in their homes for longer than the wider rental population. Evidence drawn from Experian household mobility indicators, combined with tenancy length insights from Zoopla listings data, consistently shows that suburban renters display lower turnover and a greater inclination toward multi-year occupancy. These longer tenancies mean that SFH is already used to managing rental uplifts during tenancies. However, there is a risk around the impact of tenants challenging Section 13 rent increases through the First-tier Tribunal, which could delay investors capturing increases to market rent.
Taken together, these characteristics help shield SFH investors from some of the downside risks associated with the RRA, especially relative to the wider PRS and the less well-resourced and professionalised operators in the But to Let sector. Longer tenancies support steadier rental income streams, while lower churn reduces the likelihood of frequent interactions with any new regulatory touchpoints introduced under the RRA.
There is also evidence that regulation in itself is not necessarily a negative for investment. More tightly regulated residential markets, such as Germany, Sweden and the Netherlands, remain some of the largest and most mature investment markets in Europe. As a result, the sector is well placed to maintain operational stability and deliver robust performance, even as legislative conditions evolve across the wider PRS.
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THE SCOTTISH OPPORTUNITY
Investors in England are gearing up to embrace the biggest change to the private rented sector in nearly 40 years via the RRA, yet investors north of the border have been encouraged by the Scottish Government’s support of BTR through its exemption from rent controls.
The Scottish Parliament recently passed ‘the Bill’, under which ministers can designate parts of the country as Rent Control Areas. Landlords within these zones may only increase rents in line with CPI plus one percentage point, capped at 6% per year.
However, residential developments with six or more properties built and operated for rent will qualify for exemption from this rent regulation. This extends to SFH developments. The need to increase housing delivery was cited as a key reason for regulatory support amid recognition of the role private investment can play.
We expect that certainty around rent regulation will attract greater investment to Scotland, particularly given the fundamentals of its major cities are so strong.
OUTLOOK
Defensive characteristics and structural advantages mean SFH will continue to grow.
Looking ahead, the SFH sector is likely to prove resilient to wider economic uncertainty, with strong defensive characteristics as an asset class. Some of these advantages are structural. In particular, the staggered completion and lease-up of individual units reduces the letting risk relative to other large rent-generating property assets, such as MF and Student Accommodation, where all units complete and enter the market at once.
The ability to let up as individual units complete, rather than needing to lease up in bulk, makes it easier to maintain pricing. SFH operators have also experienced noticeably reduced exposure to seasonal fluctuations in demand compared to MF, with tenancies spread more evenly throughout the year.
These characteristics help to stabilise occupancy, mitigate volatility in cash flows, and reinforce the sector’s long-term durability.
There are some risks, however, crucially a strengthening private for-sale market. A marked improvement in housebuilder sales rates (without bulk deals) may dampen demand to sell to investors.
Our survey supports this, as the number one risk to increasing sales to SFH investors in the medium term was given as improving buyer sentiment (80% agreed), whilst the return of the Help to Buy equity loan scheme, or another form of government stimulus, was also considered a risk (70% agreed).
The cost and complexity of housebuilding was also cited, particularly build cost inflation (70% agreed), but also increasing land values (60% agreed) and availability of developable land (50% agreed).
Among the lowest risks was ‘investors’ sustainability requirements’. Many investors have pared back these requirements and will still purchase sites that use gas. Also, now that the Future Homes Standard has been implemented, the gap between investor criteria and regulatory standards has narrowed. This has created greater alignment between the homes investors are demanding and those housebuilders are supplying.
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FURTHER INFORMATION
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