Overview
The focus across the Living sectors in Q3 remained on the slowdown in the delivery of new homes and the impending Renters’ Rights Bill. There were some amendments back on the table in Q3, but the Bill was approved by Parliament and gained Royal Assent soon after the quarter ended. Meanwhile, the industry welcomed news that Scottish rent caps would not apply to Build to Rent (BTR) schemes, which should serve to unlock investment in the market.
Build to Rent and Single-Family Rental
The Build to Rent (BTR) and Single-Family Rental (SFR) sectors continued to experience a softening in supply side momentum over Q3 2025. The erosion of development viability over the last 5 years has made new home delivery very challenging. Combined with delays stemming from essential changes in building regulations has resulted in sluggish supply growth. The metrics all point towards severe supply shortfalls over the coming years.
In the meantime, Zoopla have reported some of the steam has come out of the market with demand 24% lower than last year, and weaker rental growth as a result. However, the persistent supply shortfalls suggest that rents will remain under some upward pressure over the short to medium term.
Student Housing
Whilst there was apprehension around the health of the sector in Q3 2025, the latest data from UCAS published after results day in August, provided a brighter picture with the number of UK 18-year-olds accepted hitting record highs, increasing 3.7% y/y. A closer look showed that the number of acceptances from international undergraduate students increased 5.6% y/y with demand growing from both China and US. However, there is a divergence between demand between higher tariff and lower tariff providers.
Source: UCAS Statistics
Nonetheless the concerns around demand persist and are impacting on occupancy as well as sentiment in the sector with certain towns and cities more impacted than others. In particular those markets where new supply may have increased in relation to demand could translate into weaker rental growth.
“There continue to be concerns regarding student demand for UK higher education, impacting sentiment across the sector. These concerns stem from several factors including the rising cost of accommodation, tuition fees, demographics and changes in visa rules.”
Key Living Sector Activity
The BTR and SFR sectors were fairly active in Q3 with volumes of c.£1bn surpassing third quarter volumes over the last four years. Whilst there were several deals to note these were dominated by overseas players who continued to grow their exposure to the UK residential market in Q3.
Despite some of the concerns around future demand for UK higher education, the student housing sector recorded its strongest level of investment activity in Q3 2025 in over a year, at c.£1.3bn and looks set to surpass the last two years total annual investment in Q4 2025. This was driven by a mix of large portfolio deals as well as single stock transactions, with investors focused on quality assets in strong locations as well as value-add opportunities. The majority of capital deployed was from overseas investors.
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