The private rental sector (PRS) is undergoing one of its most transformative periods in decades. At the heart of this change, the Renters’ Rights Bill is intended to enhance tenant protections and drive higher standards across the sector.

At the same time, the relative success of residential property investment over commercial investment is attracting new players, particularly institutional investors – considerably reshaping the landscape of residential property.

The Bill, introduced by the Labour Government, builds upon the groundwork laid by its predecessor, the Conservatives’ Renters (Reform) Bill. Both pieces of legislation share a common ambition: to professionalise the PRS and create a fairer system. This includes a commitment to raise standards including through tenancy security and stricter health and safety regulations.

Market pressures

At Leaders Romans Group, we work with a wide range of landlords – from individual landlords who own a single investment property, to institutional investors, who operate larger-scale investments across many geographic locations within the UK, and of course in the growing Build to Rent (BTR) sector.

So we see the pressures of changing market conditions and imminent Renters’ ‘Rights Bill legislation across the sector. And while we are strongly in favour of high standards in health and safety, security of tenancies and fair rents, we see the major problem facing the sector as being one of supply and demand.

93% increase

According to the English Housing Survey, the number of households renting privately has increased by 93% in the last 15 years, while the number of owner-occupied households has grown by just 3%.

The increased number renting is not solely linked to mortgage rates or the economy, but is part of a longer term trend which also responds to the preference among younger generations for more flexibility.

Clearly a solution to meeting demand and preventing further rent escalations is increasing supply. Fortunately, the signs are positive. Research shows a substantial increase in ‘professional’ institutional investment in the UK BTR market.

Surveyed in 2022, 70% of global institutional investors stated that they anticipated being active in the suburban BTR market within the next five years: a substantial increase from the 42% then active.

Meeting demand

Furthermore, analysis by the British Property Federation (BPF) shows that the BTR pipeline, which includes completed homes, those currently under construction or those in various stages of planning, now stands at over 273,700. It grew by 5%, and the total number of completed units has now surpassed 120,000, a growth of 23% in completed stock over the past 12 months.

Our white paper ‘BTR Suburban Communities: The Next Stage in the Evolution of Build to Rent’ found that suburban BTR is key to meeting growing demand as well as meeting the standards that the Government has set out: BTR suburban communities offer fair leases and rents, along with excellent service and property maintenance.

Institutional investment in residential property, BTR specifically, is set to grow, not as a reaction to legislation but as part of a broader evolution driven by market demand and investor standards. To succeed, policymakers must support this evolution, ensuring that regulation fosters growth without stifling innovation or supply.

Andy Jones is Group Director, Corporate (Investment Sales, Lettings and BTR) at Leaders Romans Group (LRG)