What is build-to-rent?▾
Build-to-rent (BTR) is a purpose-built residential development designed specifically for the private rental market rather than for sale. BTR schemes typically offer professional management, on-site amenities, longer tenancies, and a consistent quality of finish. The sector has grown significantly in the UK since 2015.
What is a good yield for build-to-rent?▾
Gross yields for BTR typically range from 5-7% depending on location and specification. Net yields after management, voids, and maintenance are usually 3.5-5%. Prime London schemes may accept lower yields of 3-4% gross due to capital appreciation potential, while regional schemes target 6%+ gross.
How much does it cost to build a BTR development?▾
Build costs for BTR vary significantly by location and specification. In 2025, typical costs range from £150-£250 per square foot for regional schemes to £250-£400+ per square foot in London. These figures exclude land, professional fees, and finance costs which can add 30-50% to the total.
What is the difference between BTR and PRS?▾
BTR (build-to-rent) refers specifically to purpose-built rental developments. PRS (private rented sector) is the broader market encompassing all privately rented homes, including individual buy-to-let properties. BTR is a subset of PRS but with institutional-grade management and amenities.
What management costs should I budget for BTR?▾
Professional management for BTR typically costs 10-15% of gross rental income. This covers on-site staff, lettings, maintenance coordination, tenant management, and amenity operation. Higher-specification schemes with extensive amenities (gym, concierge, coworking) may require 15-18%.
What void rate should I assume for BTR?▾
Well-managed BTR schemes typically achieve void rates of 3-5%. New schemes may have higher voids in the initial lease-up period (6-18 months). Location, pricing, and amenity offering all affect occupancy. Most investment appraisals use 5% as a conservative assumption.
What is profit on cost in property development?▾
Profit on cost is a key metric in development appraisal calculated as (GDV minus total development cost) divided by total development cost, expressed as a percentage. For BTR, a minimum profit on cost of 15-20% is typically required by investors and lenders to justify the development risk.
How is GDV calculated for BTR?▾
For build-to-rent, GDV (gross development value) is calculated by capitalising the net annual rental income at an appropriate exit yield or cap rate. For example, if net rent is £500,000 per year and the target yield is 5%, the GDV would be £10,000,000. The yield you choose dominates the appraisal: at 4% the same rent gives £12,500,000 and at 6% it gives £8,333,333, so a single percentage point moves value by roughly 20%. This calculator takes the exit yield as an input rather than assuming one.
What is cash-on-cash return and how does it differ from net yield?▾
Net yield divides net annual rent by total development cost, so it measures the return on the whole cost stack and takes no account of borrowing. Cash-on-cash return divides the net cash flow left after debt service by the equity actually invested, which is total cost less debt. On a geared scheme the two are very different numbers: gearing amplifies the return on equity when the net yield exceeds the cost of debt, and erodes it when it does not. If a calculator shows the same figure for both, it is not measuring cash-on-cash at all.
What professional fees are involved in BTR development?▾
Professional fees for BTR typically total 10-15% of build costs and include architect (5-7%), structural engineer (1-2%), M&E consultant (1-2%), project manager (2-3%), planning consultant, quantity surveyor, and various specialist consultants. Interior design for BTR adds another 1-2%.
What finance rates apply to BTR development?▾
Development finance for BTR typically ranges from 5-8% interest rate with 60-70% loan-to-cost. Mezzanine finance can push total gearing higher at 10-15% interest. Once stabilised and fully let, BTR schemes can refinance onto investment finance at 3-5% with 60-65% LTV.