Britain’s housing crisis is no longer simply about failing to build enough homes. It is also about actively discouraging the people and businesses that provide rental accommodation.
New figures from Savills reveal that construction starts in the UK build-to-rent sector fell by an extraordinary 79% in the year to June 2026. Just 3,455 BTR homes started construction during the period.
Outside London, the decline was even more severe, with starts falling by 84%.
Homes already under construction were also down by 21% compared with the previous year. Completions have now exceeded new starts for ten consecutive quarters, meaning the development pipeline is being emptied faster than it is being replenished.
That should concern anyone who needs somewhere to rent.
Build to Rent Cannot Replace Private Landlords
Build to rent has frequently been presented as part of the solution to Britain’s rental shortage. Large institutional developments can provide professionally managed accommodation and deliver hundreds of homes within a single scheme.
However, BTR still represents only a relatively small part of the overall rental market. Even before this dramatic downturn, it was never remotely capable of replacing the millions of homes supplied by individual private landlords.
Now both sources of rental housing are under pressure at the same time.
Institutional developers are delaying or abandoning schemes because of high construction costs, financing pressures, planning delays, regulatory uncertainty and problems moving approved developments onto site.
Meanwhile, traditional landlords are selling properties, reducing their portfolios or deciding not to invest further.
The result is a rental market losing existing homes while too few replacements are being built.
The Wider New-Build Market Is Struggling
The BTR downturn is part of a wider problem affecting residential construction.
Although individual housebuilders may report periods of improved sales or completions, the overall development market continues to face weak buyer confidence, expensive borrowing, skills shortages, rising construction costs and regulatory delays.
Planning permission alone does not create a home. A development only contributes to housing supply when investors are prepared to finance it and builders are prepared to start work.
Government housing targets may sound impressive, but targets cannot overcome an investment market that increasingly regards residential development as slow, expensive and uncertain.
The same principle applies to the private rented sector. Ministers can demand more homes while simultaneously making investment in those homes less attractive. Eventually, the contradiction becomes impossible to ignore.
Government Policy Is Suppressing Landlord Investment
For years, landlords have faced a steady accumulation of additional taxation, licensing costs, borrowing pressures, compliance obligations and restrictions.
Mortgage interest tax relief has been restricted for individual landlords. Stamp Duty surcharges have increased the cost of buying additional properties. Local licensing schemes can cost landlords hundreds or even thousands of pounds. Energy-efficiency requirements are creating further uncertainty over future expenditure.
On top of this come the regulatory changes affecting possession, rent increases, property standards and the day-to-day management of tenancies.
Each measure may be defended in isolation. Together, they alter the basic investment calculation.
Landlords do not need to sell every property for government policy to damage supply. The landlord who decides not to purchase a second property matters. So does the experienced operator who cancels an expansion, the investor who chooses another asset class and the small landlord who sells upon retirement rather than passing the property to another rental investor.
Recent landlord sentiment surveys have shown a substantial imbalance between those intending to reduce their portfolios and those planning to expand.
That is not an accidental market movement. It is the predictable response to years of increasingly hostile policy.
Selling a Rental Property Does Not Necessarily Save a Tenant
Government rhetoric often assumes that when a landlord sells, the property simply becomes available to a first-time buyer and the housing problem solves itself.
The property does not disappear, but the rental home frequently does.
A sitting tenant may have to leave. A family needing rented accommodation has one fewer property from which to choose. The house may be purchased by an owner-occupier, but that does not help the growing number of households that cannot afford a deposit, cannot secure a mortgage or need the flexibility of renting.
One household may gain a home to buy while another loses a home to rent.
In a balanced housing market, Britain needs owner-occupied homes, social housing, institutional BTR developments and privately owned rental properties. Undermining one tenure does not automatically strengthen the others.
Demand for Rental Homes Has Not Disappeared
The private rented sector houses almost one in five households in England. It includes young workers, families with children, people moving for employment, tenants saving for a deposit and households that may never be able to purchase a property.
Demand remains intense while average rents continue to rise.
Higher rents are often blamed solely on landlord behaviour, but rents are fundamentally affected by the relationship between supply and demand. When dozens of applicants compete for each available property, rents will be placed under upward pressure regardless of what politicians say landlords should charge.
Reducing supply while demand remains high is not a tenant-friendly policy.
It gives tenants less choice, increases competition and makes it more difficult for households with lower incomes, children, pets or imperfect credit histories to secure accommodation.
The Human and Financial Cost
A shortage of rental homes does not end with higher rents.
It contributes to overcrowding, adults remaining in the family home for longer, households living in unsuitable accommodation and families being placed in temporary housing.
By June 2025, more than 132,000 households in England were living in temporary accommodation, including over 172,000 dependent children.
Local authorities are spending enormous amounts placing families in hotels, bed-and-breakfast accommodation and privately leased temporary housing. Those costs ultimately fall on taxpayers.
It is difficult to understand why government would impose policies that encourage established landlords to leave while councils are struggling to find privately rented homes for households facing homelessness.
Britain Needs Every Form of Rental Investment
The 79% fall in BTR starts should be treated as a warning.
Large institutional investors are hesitating. Small and medium-sized landlords are selling or refusing to expand. The wider housebuilding market remains constrained. Yet demand for rental accommodation has rarely been greater.
Government cannot continue attacking landlords while expecting the private rented sector to provide more homes.
Britain needs policies that encourage responsible landlords to remain, expand and invest. That means a stable tax environment, proportionate regulation, faster planning decisions, workable energy-efficiency requirements and confidence that property owners will retain reasonable control over their assets.
Tenant protection and landlord investment are not opposites. A healthy rental market needs both.
Without investment, there will be fewer homes. With fewer homes, tenants will face higher rents, greater competition and less choice.
The decline in BTR construction shows that there is no institutional army waiting to replace the traditional landlord. If government continues driving private landlords from the market while new developments stall, the rental shortage will deepen.
Britain does not have too many rental homes or too many landlords.
It has too few of both.
NetRent does not provide legal advice. This article represents our understanding of rental property law and the UK private rented sector at the time of publication.
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