Build-to-rent developments are expected to play a central role in Angela Rayner’s new towns initiative, as institutional landlords step in to help deliver Labour’s ambitious housing targets.
Industry experts predict that as much as a quarter of the homes in each of the 12 new towns—each set to accommodate at least 10,000 properties—will be build-to-rent units managed by corporate landlords.
Marcus Dixon, head of residential research at JLL, estimates that around 2,500 homes per town will be dedicated to build-to-rent, helping to drive faster delivery of new homes.
“These aren’t going to be towns exclusively of homeowners,” Dixon said. “I don’t see how the government gets anywhere near the housing numbers and the rate of delivery that they want without build-to-rent being a significant part of the solution.”
Iain Jenkinson, of CBRE, agrees, predicting that institutional landlords will make up between 15 and 25 per cent of the housing stock in Labour’s new towns.
Investors are already lining up to get involved, according to Richard Berridge, founder of Blackbird Real Estate Advisory. Over the past six months, he has spoken to at least 15 build-to-rent investors who are eager to develop homes in the planned towns.
“The build-to-rent piece is going to be crucially important to the government,” Berridge said, noting that these developers prioritise long-term rental income over immediate sales profits, making them less constrained by affordability challenges in the homebuyer market.
Build-to-rent’s importance is further underscored by the challenges faced by traditional housebuilders.
Dixon explained that even in a strong housing market, a housebuilder typically sells just one home per week per development. In a large scheme with three housebuilders, that would equate to only 150 units per year—a rate far too slow to meet Labour’s target of 1.5 million new homes over the next parliament.
Build-to-rent developers, by contrast, can deliver and let out homes at scale, accelerating the pace of construction.
The sector has grown rapidly in recent years, doubling in size since 2021 to reach 110,000 completed units, according to JLL. What was once an industry focused on urban high-rise flats is now expanding into suburban family homes, making it well-suited to the new towns model.
Labour has confirmed that its new towns will include a mix of tenures, incorporating both homes for purchase and rental properties. Rayner has previously signalled her support for build-to-rent as part of a diverse housing mix.
In July, she stated: “Mixed-use sites, which can comprise a variety of ownership and rental tenures including rented affordable housing and build-to-rent, provide a range of benefits—creating diverse communities and supporting timely build-out rates.”
The new towns taskforce, which is advising on the project, includes several figures with build-to-rent expertise. Among them are Helen Gordon, chief executive of Grainger, the UK’s largest listed residential landlord, and Bill Hughes, head of real estate at L&G, which has invested over £3 billion in build-to-rent developments.
Hughes has previously suggested that institutional investment in social housing and build-to-rent could fund up to half of the homes Britain needs each year.
Labour’s decision to embrace build-to-rent comes amid mounting concerns over slow build rates from private housebuilders.
A new report by the Institute for Public Policy Research (IPPR) found that 1.4 million homes in England have received planning permission since 2007 but have not been built.
The report’s author, Maya Singer Hobbs, argues that developers deliberately slow construction to maintain high house prices.
“Market-driven housebuilding is broken,” she said. “It won’t deliver the 1.5 million homes the government has promised.”
The government has vowed to overhaul the planning system and ensure developers build at pace once they receive planning permission.
A Housing Department spokesman said: “This government inherited the worst housing crisis in living memory, which is why we are taking urgent action to overhaul the planning system and deliver 1.5 million new homes as part of our Plan for Change.
“Our new towns will deliver thousands of new houses of all types, including homes to buy and rent.
“We are clear that once housebuilders have been granted planning permission, we expect them to build as quickly as possible so we can deliver the homes that people desperately need.”
As Labour’s new towns blueprint takes shape, build-to-rent looks set to play a pivotal role in meeting housing targets, accelerating delivery, and offering an alternative to traditional homeownership in Britain’s expanding communities.
Meta description: Build-to-rent developers are set to dominate Labour’s new towns plan, with institutional landlords expected to deliver up to 25% of homes. Experts say rental-led development will accelerate construction rates.
