Overview

The institutional residential sector emerges as a clear winner from the Autumn Budget. Higher property income taxes for taxpayers are expected to exacerbate the current trend of landlords exiting the market, driving greater rental demand towards Build to Rent (BTR) and other professionally managed rental sectors. 
 

Build to Rent and Single-Family Rental

There was further evidence that steam had come out of the rental market in Q4 2025 with demand softening and rental growth slowing. However, the Build to Rent and Single-Family Rental (SFR) sectors continued to experience a softening in supply side momentum over Q4 2025. With low levels of new build deliveries and fewer rental properties in the market, the demand supply imbalance in the rental sector is set to be a persistent aspect of the housing market. This structural feature is likely to support Living sector strategies over the medium term. This should continue to underpin rental growth albeit at more moderate levels than were experienced over the last 3 years.

Student Housing

In the Purpose-Built Student Accommodation (PBSA) sector, despite all the concerns regarding the financial health of UK universities and impact of the changes to the visa system, the UCAS October application deadline data painted an optimistic picture for UK higher education.
Both international and domestic applications were up and there was the first recorded increase in applications from EU students since Brexit.
Whilst concerns around demand for Purpose-Built Student Accommodation persist, the demand picture varies hugely by location and tariff of university with the higher tariff establishments generally seeing a pick-up in demand whilst lower tariff universities experience a weakening in applications, translating into weaker demand for accommodation, including PBSA.

Key Living sector activity

Investment activity in the BTR and SFR sectors marginally increased in Q4 2025 to c. £1.4bn, taking annual volumes to £4.6bn. Whilst this was 6% lower than the 2024 total, it was solidly above the 10-year average. 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 Q4. 
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.
Deal activity was weak in Purpose-Built Student Accommodation in Q4 but there is strong appetite for well-located student accommodation. At c.£510m in Q4, total annual volumes reached c.£2.8bn surpassing the last two years. Investment was focussed on the PBSA close to Russell Group unis highlighting the bifurcation in the UK higher education system. Investors are recognising the improving demand fundamentals for those establishments, whilst viewing other locations as less certain or stable.

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