Real estate
Is now the moment to lean into single-family housing?
7 min read 9 Feb 26
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What happens when affordability pressures, demographic shifts and hybrid working all point in the same direction? Institutional capital appears to be quickly moving toward single-family housing, which has captured a rising share of UK Build-to-Rent investment as it aligns more closely with household preferences and as other housing types face growing viability pressures. Could single-family housing be the clearest expression yet of where the living sector is structurally headed?
Institutional priorities are beginning to evolve in ways that tell a wider story about the living sector. After a decade in which multifamily (MFH) largely dominated allocations, single‑family housing (SFH) has started to take a larger share. Rather than signalling a wholesale reshuffling of residential formats, the shift may reflect a change in relative viability.
SFH typically comprises suburban homes let to families and long‑term tenants, while MFH concentrates residents in urban blocks with shared amenities and shorter tenures. Each serves a different stage of the occupier life cycle, but that operational distinction is becoming strategic. Affordability pressures, later household formation and more entrenched hybrid working are pushing demand toward the edges of major cities, where space, connectivity and value align.
“Affordability pressures, later household formation and more entrenched hybrid working are pushing demand toward the edges of major cities, where space, connectivity and value align.”
Recent capital flows underline this dynamic. In the UK, SFH captured 59% of all Build‑to‑Rent (BTR) investment in 2025, up from 47% in 2023 and 50% in 20241. Higher‑density urban schemes have absorbed the brunt of rising construction costs, tighter financing and growing planning complexity, while SFH has been less exposed to these constraints.
Even so, this recalibration doesn’t diminish the long‑term role of MFH. Flats and taller buildings remain essential to urban housing delivery. Current allocations simply indicate that investors are favouring formats that are more deliverable in today’s environment, rather than stepping away from MFH as a core component of long‑term residential strategies.
The UK: Supply shortages, later ownership and rising demand for family‑sized homes
The UK sits within the broader European pattern of shortage‑driven housing stress but with sharper national contours. A long‑run deficit of roughly 6.5 million homes places it second‑worst in Europe for homes per capita2 , and annual net additions – little more than 200,000 in 2024/253 – remain far below the 300,000 homes a year targeted to narrow the gap4.
Home ownership affordability has deteriorated on multiple fronts. In 2024, homes cost 7.7 times median annual earnings5 and first‑time buyers faced deposits averaging £61,090, roughly 1.5 times annual income6. The end of the rock‑bottom interest rate era has compounded these pressures, tightening mortgage affordability just as structural undersupply has intensified.
The end of Help‑to‑Buy in 2023 also removed a key route into ownership, leading to a sharp drop in transactions – around 25% for houses versus 14% for flats – and disproportionately affecting the family‑sized homes that younger households aspire to.
The sharpest trend, however, is the rise of older renters. Households in their mid‑30s to mid‑50s now form one of the fastest‑growing segments of the private rented sector. Many of these households would historically have transitioned into ownership, but prolonged affordability constraints — and the withdrawal of Help‑to‑Buy — have kept them in the rental market for far longer. This reflects not just delayed household formation but a structural shift in tenure pathways, with mid‑life renters becoming a stable, enduring demand base.
These pressures are strongest in suburban and commuter belt locations where families look for more space, gardens and school access without the burden of ownership. This demand pattern aligns naturally with the profile of UK SFH, which tends to generate longer tenancies and steadier occupancy than high‑density urban MFH.
While MFH remains central to city centre living, it is also more vulnerable to construction costs, shared amenity requirements and regulatory changes. SFH’s simpler formats, lighter maintenance needs and lower operational complexity make its income streams more predictable in today’s conditions.
Institutional penetration remains low – around 20,000 completed SFH units compared with 128,000 for MFH7 – so growth is driven by new supply, not displacement. For a market constrained by delivery and defined by rising demand for family‑sized rental homes, SFH combines resilience, demographic alignment and the ability to add stock where shortages are greatest.
Policy changes support this trajectory. The Renters’ Rights Act 2025 will scrap ‘no‑fault’ evictions from May 2026, move all tenancies to open‑ended agreements and limit rent increases to once annually – all designed to raise security and professional standards across the sector. Alongside planning reforms, expanded Homes England programmes and emerging ‘grey belt’ measures, there is a clear shift towards delivery models that prioritise consistency over quick wins.
That plays directly to the strengths of SME housebuilders. Smaller, regionally rooted firms regularly score highly in HBF ratings and match the customer satisfaction levels of the largest developers, showing how quality often thrives at a local scale8. The SFH model reinforces this advantage by enabling developers to forward‑sell units within larger plots, which helps recycle capital more quickly and allows new neighbourhoods to establish themselves sooner, often lifting later individual sales. In practice, this creates genuine win‑wins for investors and developers and strengthens the role SMEs can play in delivering the kinds of homes this policy environment is designed to support.
This is not a question of SFH replacing MFH, but of capital adjusting toward formats that are currently more deliverable and offer stronger risk‑adjusted returns, while higher‑density schemes contend with more acute feasibility challenges.
“This is not a question of SFH replacing MFH, but of capital adjusting toward formats that are currently more deliverable and offer stronger risk‑adjusted returns, while higher‑density schemes contend with more acute feasibility challenges.”
Europe: A similar story, driven by scarcity and suburbanisation
Many of the pressures shaping the UK housing market are not unique. Years of constrained construction and falling permitting volumes have left the region meeting only around 64% of annual housing need, creating a shortfall of roughly 9.6 million homes9.
Demographic shifts are compounding the pressure. Over the past decade, households across Denmark, Spain, France, Sweden and Belgium have moved steadily toward suburban and small-town locations, driven by tighter urban affordability and rising expectations for space. The shift accelerated after 2015 and has been further strengthened by hybrid and remote working patterns, which have increased the value placed on an extra room, outdoor space and lower‑density living.
Today, just over half of European Union residents now live in houses rather than flats, and about one‑third rent – a combination that implies a large and growing cohort of renters in houses rather than flats10.
“Today, just over half of European Union residents now live in houses rather than flats, and about one‑third rent...”
Private renters living in houses already represent one of the fastest‑growing segments of the European rental market, with around 11.5 million households concentrated in suburban belts and commuter towns, where SFH is structurally aligned with demand11.
This mirrors the UK’s rise in mid‑life rentership: delayed partnering, later household formation and prolonged stays in rental accommodation are expanding the cohort of older ‘nesters’ seeking stability and space.
Policy responses reflect this dual tension between affordability and delivery. Many countries are tightening protections for tenants in existing stock, while deliberately carving out flexibility for new‑build rentals to preserve viability. Ireland exempts recently delivered apartments from rent‑cap rules, Scotland’s long‑term rent system signals flexibility for BTR, Germany excludes post‑2014 stock from its rent brake and Spain applies tensioned‑area rules regionally, with several regions shielding new supply. The underlying principle is consistent: protect tenants where homes already exist, and enable delivery where they do not.
“Many countries are tightening protections for tenants in existing stock, while deliberately carving out flexibility for new‑build rentals to preserve viability.”
Operational performance strengthens the case. Long‑run data from the Netherlands show that suburban single-family portfolios tend to deliver lower vacancy and lower ongoing capex than multi-family blocks, reflecting fewer shared systems, less wear‑and‑tear and longer tenures. For investors, this translates into more predictable income and reduced turnover costs.
Together, Europe’s housing shortage, suburbanisation trend and policy orientation create a supportive environment for institutional SFH. The opportunity lies not in displacing existing owners but in adding new, family‑sized homes where shortages are deepest. As in the UK, SFH is fast becoming a core component of addressing structural housing imbalance.
The bottom line
The momentum behind SFH in the UK and Europe reflects a fundamental structural constraint: both markets struggle to add new supply. Affordability challenges may resemble conditions elsewhere, but the defining issue here is years of under‑building, complex planning systems and political sensitivities around land use that have left suburban, family‑sized homes chronically scarce. Debates over ownership or second homes may dominate headlines, yet they do not alter this basic shortage.
SFH looks compelling because it sits directly at the intersection of the macro trends driving this imbalance. Ageing renter cohorts, rising mid‑life rentership, hybrid working patterns and widening affordability gaps are pushing households toward homes that offer space and stability – needs that MFH cannot fully meet.
“Ageing renter cohorts, rising mid‑life rentership, hybrid working patterns and widening affordability gaps are pushing households toward homes that offer space and stability – needs that MFH cannot fully meet.”
Governments, meanwhile, are under pressure to expand supply while improving standards, creating a policy environment that increasingly supports tenure models able to deliver suburban stock efficiently and maintain it professionally.
SFH is not a complete solution to the region’s housing imbalance, but it occupies a pivotal role by offering professionally managed, stable rental homes in the places where households increasingly want to live. Operationally, SFH typically delivers longer tenancies, lower turnover and simpler building – traits that translate into more predictable income and lower risk for institutional portfolios.
For investors, the opportunity lies not in reshaping existing tenure patterns but in adding new suburban homes at scale, precisely where shortages are deepest and affordability pressures greatest. That alignment of demographic demand, operational resilience and policy support can make SFH a compelling long‑term allocation, in our view.
1 Piers de Winton and Guy Whittaker, ‘Savills: UK Build to Rent investment volumes reach record £5.3 billion in 2025’, (savills.co.uk), January 2026.
2 Ben Hopkinson, ‘How Many Homes Does the UK Need?’, (cps.org.uk), June 2025.
3 UK Ministry of Housing, Communities and Local Government, ‘Housing supply: net additional dwellings’, (gov.uk), November 2025.
4 Savills, ‘English Housing Supply Update Q3 2025’, (savills.co.uk), December 2025.
5 Office for National Statistics, ‘Housing affordability in England and Wales: 2024’, (ons.gov.uk), March 2025.
6 Halifax, ‘First-time buyer market rebounds as a fifth more stepped on the ladder last year’, (lloydsbankinggroup.com), February 2025.
7 BPF, ‘Build-to-Rent report - Q4 2025’, (bpf.org.uk), January 2026.
8 HBF, ‘National Customer Satisfaction Survey’, (hbf.co.uk), July 2024.
9 CBRE Research, ‘European Real Estate Market Outlook 2025’, (cbre.com), January 2025.
10 Eurostat, ‘Housing in Europe – 2025 edition’, (ec.europa.eu), November 2025.
11 Eurostat, ‘European Statistical System’, (ec.europa.eu), 2021.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast.
