Build to Rent

Viewpoint - 02/05/2024

Build to Rent: In search of clarity

In this viewpoint Mary-Jane O'Neill, Head of Planning (London and South), argues that greater clarity is needed from local planning policy to support the delivery of BTR schemes.

Find out more

Greater clarity is required from local planning policy, to provide developers and investors with more certainty around the prospects for Build to Rent (BTR) schemes; and to maximise their social and economic benefits.

A lack of consistency

While BTR has grown in popularity as a means of providing high quality professionally managed homes and affordable Discount Market Rent (DMR) housing, the support provided by local planning policy is inconsistent. Lambert Smith Hampton (LSH) has explored trends in adopted, emerging and absent BTR policy across Greater London, which tends to act as precursor to wider national trends, to provide insight into what is needed from policy to give developers greater certainty around the delivery of BTR schemes.

The national framework

The latest version of the National Planning Policy Framework (NPPF) was published in December 2023, but notably included no alterations to BTR policy; retaining the original definition, added in 2018, which confirmed that schemes built solely for rent are exempt from the 10% affordable housing requirement. However, the NPPF now also includes specific references to assessing needs for retirement housing, housing-with-care and care homes, which are often rented products and could require more explicit local planning policy support in future.

Spotlight on London

The London Plan (2021) includes a BTR-specific policy, known as Policy H11, which sets out the criteria for proposals to qualify as BTR developments, while encouraging boroughs to set their own thresholds regarding the number of homes that constitute BTR and proportions of DMR homes. Policy H11 specifies that homes are held as BTR for a minimum covenant of 15 years, to ensure that they remain within the rental sector, but also emphasises the need to monitor covenant periods and potentially increase them as the market matures.

The onus is on local planning authorities (LPAs) to determine the complexities of BTR policy for their areas, placing responsibility on accurate and informed Local Plan policies, as set out within National Planning Practice Guidance (NPPG).

LSH has undertaken a review of planning policies across the London boroughs and development corporations to ascertain the existence and extent of BTR policy, including compliance with the London Plan. We have found evidential gaps in both policy and guidance, which could potentially result in BTR needs not being met.

Nearly half (45%) of London’s planning authorities have no BTR-specific policy within their adopted Local Plans. This includes three (Bexley, Havering and Southwark) whose plans were adopted since the publication of the 2021 London Plan, but do not reflect Policy H11.

Where Local Plans do include BTR-specific policies, these predominately require compliance with Policy H11, with which major and referable schemes are required to accord. However, some plans provide additional detail, such as Brent’s Local Plan (adopted 2022), which specifies locations where BTR is acceptable and the size of development.

There are also some disparities in stipulations around covenants with, for example, Lambeth’s Local Plan requiring that BTR schemes are subject to covenants of at least 25 years, as opposed to the London Plan’s 15-year minimum requirement.

Build to Rent London Map

Certainty required

We believe that greater clarity and guidance within local planning policy is required to ensure that BTR is delivered appropriately and where it is most needed to address London’s acute housing shortage. The areas of BTR policy requiring enhanced clarity are summarised at the bottom of this page.

Improved policy clarity would provide greater certainty to investors and developers on the acceptability of BTR schemes within particular areas, demonstrate LPAs’ commitment and support to delivering appropriate BTR projects, and speed up the process of submission and determination of BTR applications.

This said, there is not necessarily an evident correlation between supportive or detailed planning policy, and the number of BTR schemes coming forward. Boroughs without specific BTR policies in their Local Plans include some, such as Tower Hamlets, Southwark and Croydon, that have seen relatively high volumes of development in the sector.

Local planning policy is just one factor influencing the location of BTR schemes, alongside market trends, politics and demographics. More detailed planning policy can restrict the locations where BTR is accepted within a local authority area, while an absence of policy may sometimes prove less constrictive to BTR opportunities.

Affordability provisions

A particular area of uncertainty, and a key challenge to BTR schemes, is affordability, as rents are typically higher than in the wider private rented sector. While guidance within the NPPF is broad and advises that affordable housing provision and type is to be determined by each LPA, Policy H11 of the London Plan is more prescriptive for BTR developments. Most notably, it includes a requirement that BTR schemes deliver at least 35% affordable housing to follow the Fast Track Route through planning.

However, there is some inconsistency between local policies across London. In Hackney, for example, there is a specific target that 50% of homes in BTR schemes are affordable, subject to viability; while Lambeth’s Local Plan provides additional clarification on what affordability provisions are required to qualify a BTR scheme for the Fast Track Route.

Among the more recently adopted and emerging Local Plans, such as Lambeth, Wandsworth and Merton, there is a general trend that the Viability Tested Route must be followed where the required affordable housing provision cannot be met. This suggests that, while not consistently applied across boroughs, there is a movement towards a greater commitment to securing affordable provision within BTR schemes in London, which we expect to be replicated to a certain degree across the rest of England.

Build to Rent Policy Diagram


Proactive policy needed

The NPPF and the London Plan support the delivery of a wide range of housing types and tenures, including BTR, to cater for and create diverse communities. A consistently proactive and tailored approach to BTR policy at a local level is, however, currently lacking, despite the NPPF and regional policy actively encouraging BTR-specific policies within Local Plans.

The areas of uncertainty identified must be addressed to increase confidence for developers and investors, and to maximise the social and economic benefits of BTR schemes within communities. At a time where housing provision, particularly affordable tenures, is a key challenge, a more joined-up, proactive approach within local policy will enable developers and LPAs to have greater confidence in BTR as a housing solution.

This viewpoint appeared in the Build to Rent Report 2024.


Get in touch


Get the latest insight, event invites and commercial properties by email