TRANSATLANTIC TRENDS
TRANSATLANTIC TRENDS
Vice Chair, Womble Bond Dickinson US
Partner, Womble Bond Dickinson US
Womble Bond Dickinson has a strong presence in the US where the BTR market is more mature. With three quarters (75%) of developers and funders believing that the US rental market model provides valuable insights for UK investors, we have investigated the parallels between the two markets. As a transatlantic law firm, we are uniquely positioned to do so.
In the US, BTR primarily consists of single-family homes, typically as standalone units or townhouse style properties, while multi-family housing is usually defined as five or more residential units in multi-storey projects under common ownership. In contrast, the UK BTR market includes a broader mix of houses, flats and apartments, with UK single-family rental (SFR) closely resembling US BTR but incorporating more vertical construction.
Three quarters (75%) of developers and funders believing that the US rental market model provides valuable insights for UK investors.
Kenneth Van Winkle, Vice Chair, Womble Bond Dickinson US, explains:
US BTR is largely focused on single-family build to rent communities, driven by suburban demand and established financial models. Multi-family developments have long shaped urban growth, giving investors confidence in their performance. Although the UK market takes a slightly different path, featuring a wider range of property types and being at a different stage of development, there are intriguing similarities.
The US multi-family and BTR sectors have emerged as influential models for housing accessibility and investment. With 83% of respondents familiar with the institutional housing market in the US, our findings suggest that the UK could benefit from adopting aspects of the American rental approach.
Living the American dream
In the US, housing development is significantly driven by multi-family projects and large residential communities. Beyond providing homes, the pace and volume of housing construction acts as a key economic indicator, fluctuating in response to influences such as material costs, financial conditions and, more recently, tariffs. This strong connection between housing and economic stability reflects how ingrained large-scale development is in the US – a contrast with the UK, where owning your own home has traditionally been the focus and rental properties remain fragmented under smaller landlords.
Elizabeth Lee, Partner, Womble Bond Dickinson US, explains:
While homeownership also remains the American dream, for a growing portion of the population, it feels increasingly out of reach – or even undesirable. The reality is, the US housing market runs on large-scale development, whether it’s multi-family projects or large residential communities. This deeply institutionalised system shapes both housing supply and the broader economy, marking a key distinction from the UK housing market.
Planning ahead
The US zoning system also offers valuable insights for UK land use planning. By creating different zones, managed at a local city and municipality level, each has their own pre-determined regulations on how the land can be used. This provides developers and funders with certainty, streamlining the development process.
Tom Willows adds:
A similar model in the UK could provide clarity for developers by involving communities in shaping long-term growth strategies, mitigating potential planning conflicts as well as local NIMBY (not in my backyard) concerns. At present the lack of certainty with a committee-led (and all too often political) planning system is anecdotally said to be a key factor in delaying and preventing much-needed new housing delivery. Our research underpins that viewpoint and our experience from the US shows us there is possibly a better way.
Financial flexibility
The financing of the US housing market is another topic that 41% of respondents recognise as an area UK BTR could learn from. Government-sponsored entities (GSEs) play a vital role in funding US housing. Instead of lending money directly to homebuyers or multi-family developers, GSEs purchase mortgages from banks and lenders. Mortgages are bundled into securities and traded in capital markets, fostering a strong secondary market that attracts banks and institutional investors, creating liquidity.
Originally intended to support affordable housing, the system has evolved to include large-scale rental and commercial developments. As institutional investment in residential markets grows, UK investors can learn from the US model, particularly in areas like standardised financing, securitisation, project management and long-term rental strategies.
However, the continuing growth of BTR in the US has also created a moral dilemma with large institutions buying up developments and shrinking the market for those trying to buy their own homes.
Kenneth Van Winkle explains:
As institutions buy up available properties to rent, more and more Americans who want to purchase their own home are being priced out of the market. We’re now seeing legislation being proposed in various cities, states and at a federal level to limit the number of homes that institutions can own, with some parts of the country also considering rent controls to make BTR less desirable and slow the market down. The UK is not at this stage yet, but this could be a warning of things to come for developers and investors.
There are some clear lessons for UK BTR to learn from the US, from the role of institutional investment, purpose-built rental communities and locally-driven planning that provides certainty. But the US market also offers a glimpse of what could lie ahead for the UK – both good and bad.
Tom Willows adds:
We have seen the early signs in the UK of public concerns and headwinds arising from the acquisition of large numbers of new homes by institutions and others as those same homes become less and less affordable for potential owner occupiers. We have witnessed in the US the moral discussions that same dynamic has prompted.
That all underpins the need for the UK BTR sector to be very clear about the concept of additionality, and to be on the front foot with the message that the investment in UK housing in this way unlocks the delivery of more homes in less time than would otherwise be the case without institutional investment.
