2026 Will Test BTR’s Potential and Government’s Resolve
By Justine Edmonds, Head of Build to Rent / Leasing Strategies, LRG
Throughout 2025 I have spent hours in meetings with and on discussion panels with institutional investors, developers and local authorities. And everything I’ve picked up on in the last year suggests that 2026 will be a crossroads for Build to Rent (BTR). The fundamentals are as strong as they have ever been. Demand for quality rental homes is intense, capital is available and the development pipeline is substantial. Yet sentiment is fragile, some schemes are stalling and the planning system is struggling to convert ambition into delivery.
What happens next will decide whether BTR becomes a mainstream part of the housing mix or remains a missed opportunity on the edge of policy.
BTR has to move into the mainstream
If the government is serious about delivering 1.5 million homes, BTR cannot sit on the sidelines. A realistic model for large sites is not the traditional 70% market / 30% affordable split, but a three-way blend of open market housing, affordable housing and BTR. A 33/33/33 approach allows BTR to play a full role, including discounted market rent, while still delivering a serious volume of affordable homes.
By contrast, the new “Grey Belt” rules, with an expectation of up to 50% affordable housing on former Green Belt, risks tipping schemes into non-viability once infrastructure, remediation, biodiversity net gain and design standards are factored in. In London we have seen what happens when targets outrun the market’s capacity to deliver: starts collapse and affordable output falls with them.
My prediction for 2026 is a clear divergence. Authorities that embrace BTR as a formal tenure in their local plans will see large, complex sites move forward. Those that cling to blanket 50% requirements on challenging land will watch landowners and funders look elsewhere.
Certainty will unlock stalled schemes
The BTR market is not short of demand but it is short of certainty. Multi-family submissions have dropped sharply from their peak, and even consented projects are on ice because the numbers no longer stack up. High build costs, layers of development taxation and an unpredictable fiscal regime have pushed many schemes to the edge.
Three moves from government would change the tone in 2026. Reinstating Multiple Dwellings Relief on Stamp Duty would immediately restore viability to thousands of homes that became marginal overnight when it was removed. Extending empty property business rates relief and removing council tax on newly completed but unoccupied BTR blocks would ease early cashflow. Clarifying VAT rules and extending zero-VAT on energy-saving materials to refurbishment would encourage much-needed retrofit of older assets.
It is imperative that the stop-start pattern of development ceases and that schemes are able to come to fruition with a stable framework. If ministers can give investors a clear, multi-year view on tax and regulation, the capital is ready to flow. If they cannot, the pipeline will stay on paper.
Regulation will reward the best operators
The Renters’ Rights Act will also shape 2026. An implementation roadmap is expected shortly, with the new tenancy system arriving ahead of database and ombudsman reforms. For BTR operators, this is not something to fear. Professionally managed, well-specified stock is already aligned with the direction of travel.
I expect the Act to accelerate the shift from fragmented buy-to-let towards larger, institutional landlords. That will sharpen the focus on service, building performance and long-term stewardship. Those BTR owners who invest in management, resident experience and sustainability will be well placed as the market consolidates.
Conclusion
2026 will show whether BTR is treated as a core part of the housing mission or as a footnote. The sector is prepared to deliver at scale. The question is whether planning policy and fiscal choices will allow it to do so.
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