Build-to-Rent viability warning as ARL urges government action

The Association for Rental Living (ARL) is urging the government to take prompt action to support the UK’s Build-to-Rent (BtR) sector and address the increasing issue of viability that is deterring investment in new rental homes.

It warns that rising costs, regulatory change and weaker investment returns are discouraging investors from backing new BtR developments.

The intervention follows the withdrawal of the John Lewis Partnership from its BtR property business.

ARL’s chief executive Brendan Geraghty described that shock move as ‘deeply disappointing news and a real loss for consumers’.

The letter comes after the British Property Federation urged the Chancellor to use the Spring Statement this week to reinstate Multiple Dwellings Relief, arguing it would unlock stalled BtR schemes.

John Lewis BtR bombshell

The ARL has now written to Housing Secretary Steve Reed, urging ministers to ‘take sharp notice’ of the decision by John Lewis Partnership.

It states: “We write following the recent announcement of the withdrawal of the John Lewis Partnership (JLP) from its Build-to-Rent property business, calling upon the government to take sharp notice of this deeply disappointing news and take immediate action to support the UK Build-to-Rent sector.”

It continues: “This is not about one business model. It is about viability.

“A compounding set of regulatory and market dynamics have decimated the viability of investment in building much-needed additional new rental homes.”

BtR projects withdrawn

The organisations says that across the sector, projects are being slowed, redesigned or withdrawn.

ARL also said that growing construction costs, higher interest rates, softer yields, expanded Section 106 expectations and cumulative regulatory change have lowered development margins.

The letter states: “Institutional capital requires stability to price risk.”

The letter is also addressed to Chancellor Rachel Reeves, Housing and Planning Minister Matthew Pennycook, housing minister Baroness Taylor of Stevenage and Florence Eshalomi, chair of the Housing, Communities and Local Government Committee.

Build-to-Rent facing issues

The letter adds: “Institutional capital is mobile. If UK risk-adjusted returns fall below threshold, it reallocates internationally or into alternative sectors.”

The organisation also links the John Lewis decision to wider pressures facing BtR investors and developers.

The ARL said the consequences without intervention would include slower housing delivery and reduced rental supply.

It stated: “Without intervention, the consequences are clear – slower housing delivery, reduced rental supply, increased affordability pressure and greater reliance on short-term or lower-quality stock.”

Further sections of the letter call for policy stability and clearer planning frameworks to support delivery.

The organisation also notes that Build to Rent has already delivered more than 146,000 professionally managed rental homes across the UK.