Grey belt golden rules should leave space for build-to-rent

We can see this effect in London, where a requirement for affordable housing, even at just 35%, combined with rising costs has contributed to a collapse in private housing starts and therefore negligible delivery of affordable housing units.

In response, the government and mayor have consulted on a temporary reduction in affordable housing to 20%, alongside temporary Community Infrastructure Levy relief and more interventionist mayoral oversight. London has, in effect, acknowledged that high targets have exceeded what the market can sustain and that only by rowing back on affordable housing targets will it be possible to deliver the housing units needed.

If London, with its high values and high demand, cannot deliver consistently under aggressive affordable expectations, it is probably unrealistic to assume that a blanket 50% requirement can be met across all the country’s geographies.

It is clear that beyond a certain threshold, increasing the proportion of affordable housing does not increase the number of affordable homes, but reduces the total number of homes built.

A different approach is needed, one that still delivers substantial affordable housing while bringing in new sources of capital and smoothing delivery. A strong case can be made for a 33/33/33 model: a third open market housing, a third affordable and a third BTR – which can itself include a proportion of units at a discounted market rent. This retains a serious commitment to affordable housing while widening the tenure base and drawing in institutional investment at scale.

The inclusion of BTR changes the fundamentals of delivery. Unlike market sale, BTR is not constrained by absorption rates. Forward-funding agreements allow early infrastructure (including community infrastructure) to be financed, contractors to be kept on site and phases to progress regardless of short-term market softening.

BTR units can be completed and occupied quickly, supporting local centres and public services from the outset. On complex sites where early cashflow is critical, this can determine whether a scheme proceeds at all.

Investors have long recognised the strength of BTR. According to British Property Federation analysis, there are now more than 130,000 completed BTR homes in the UK and close to 300,000 in the pipeline. Stock grew by around 14% last year. Institutional funders underwrite close to half of the pipeline and many regard BTR as their preferred asset classes.

In the first nine months of 2025 alone, over £3bn was invested, with almost £1bn committed to single-family housing in the first half of the year. High rental demand, shifting household profiles and inflation-linked income make BTR an attractive proposition, particularly when compared with more volatile commercial sectors.

“Large sites that combine market sale, affordable housing and BTR from the outset attract a broad range of residents, sustain early community infrastructure and reduce the risk of stalled or half-occupied first phases”

For those concerned about the sector’s apparent inability to meet housing targets (whether from an open market or social housing perspective), this growth in institutional appetite is more than welcome.

Recent economic and political uncertainty has made sales-led delivery harder to forecast. BTR offers the chance to de-risk large schemes by securing a significant portion of value early and reducing exposure to sales cycles. The ability to flex the balance between market sale, affordable housing and BTR between phases provides an additional safeguard at times of volatility.

A mixed-tenure approach also offers clear placemaking advantages. Large sites that combine market sale, affordable housing and BTR from the outset attract a broad range of residents, sustain early community infrastructure and reduce the risk of stalled or half-occupied first phases.

For areas where scepticism about development is often rooted in concerns about slow delivery and delayed facilities, this matters as much as the financial case.

The 50/50 grey belt model is built on good intentions, but London’s experience shows that when viability is stretched too far, the result is not more affordable homes but fewer homes overall. A 33/33/33 model, with BTR playing its full part, offers a more credible route to the same ambition: significant affordable housing, faster delivery, stronger places and a more reliable pipeline of new homes to address the housing crisis.

Justine Edmonds, head of BTR and leasing strategies, LRG