From View From The Top, Issue #38
Two models wearing the same hat
The question I’ll be co-chairing at Europe GRI in Paris next week
I’ll be at the InterContinental Paris Le Grand next week, co-chairing a discussion at Europe GRI. This is the question the organisers put on the card.
GRI discussions are closed-door and candid opinions given by industry leaders, which is why they’re worth attending. But I’ve always believed you should be willing to put your position in writing before you walk into a room. So here’s mine — published in advance as food for thought and for comments before the event.
My answer starts with the idea or single premise:
BTR ISN’T ONE MODEL
Ask the question whether “the model” can still deliver and you’ve already assumed there’s only one model. There isn’t. There are two, and they’ve been wearing the same hat for more than a decade.
1. The first is the financial model.
Born around 2012, perfected by 2021. Buy or forward-fund at scale, at rising and peak land prices, with leverage priced off zero rates. Compress the forward yield in the model, mark the appreciation as done, hold passively, let the complicated spreadsheet do the owning. A financially engineered product with a bunch of apartments attached.
I wrote about the unwinding in the spring — the institutional funds heading for the exit, citing depreciation and meaning overpayment. That wasn’t a failure of rental housing. It was a failure of a capital structure engineered off optimistic future expectation: peak entry meeting a repriced cost of money, with a passive owner in the middle who had no operational levers to pull when the maths turned south.
The drivers for this model are finished. And the exits are the proof, and so is the absence of new capital willing to underwrite it like before.
2. The second is the operational led model.
Owning buildings as businesses. Entry at honest prices. Reserve properly for capex. Know the rent roll the way any shopkeeper knows his stock at today’s prices. Manage voids, retention, and maintenance as operating disciplines rather than line items in someone’s management reporting pack.
For many years cheap leverage made the financial model look cleverer. It wasn’t cleverer. It was just earlier in the cycle.
So: can BTR still deliver? The older financial version, no. The operational version, yes — and selectively. And the selectivity is where the regional question gets interesting.
THE DEMAND SIDE IS NOT THE DEBATE — THE NUMBERS ARE
Let me deal with the easy stuff first, because panels waste time on it. And this time, let me do it with numbers.
Here’s the deficit: Britain is short somewhere between four and six and a half million homes, depending on whose methodology you prefer. Take the conservative end — a backlog of over four million against European norms — and it’s still a generation of building at any realistic pace.
Now look at what we’re actually delivering. Housing completions in England totalled 143,110 in 2025-26 — the lowest level since 2015-16. The lowest delivery in a decade, against the largest deficit in living memory.
And the pipeline behind it is worse than the delivery in front of it. That’s the honest scary part. The number of building sites granted planning permission dropped to 1,220 in the first quarter of this year — the lowest since records began in 2006. Permission was granted for just over 54,000 homes in three months, against a government target of roughly 300,000 a year. Major housing schemes now take over 300 days to decide — up 75% in a decade. And the most telling statistic of all: in six of nine English regions, fewer homes were granted consent in the year to Q1 than were actually completed. The pipeline isn’t growing slowly. It’s contracting.
The viability picture explains why. Schemes that once pencilled comfortably at a 15-20% margin are now marginal or loss-making at current land values — and 77% of developers I see cite planning delays as a constraint in the latest surveys. The 1947 planning reform settlement I’ve written about all year, colliding with a cost base that hasn’t come back down.
And one number that belongs directly on the Paris table: build-to-rent construction starts in London collapsed roughly 80% in 2025, with building safety reforms having doubled average permission times in the capital since 2019.
Let’s read that again. The asset class the institutions bought and wan to buy as the future of housing has for now effectively stopped being built in Britain.
So no — demand is not the debate. A four-million-home hole, decade-low delivery, a record-low pipeline, and BTR starts in London down 80%. If demand were the question, there’d be no panel.
The question I guess is whether the economics of owning and building rental housing work right now. And that’s not a demand question. It’s a returns model question, region by region – it’s also a capital cost question which is for another discussion and which I’ve touched on before.
THE REGIONAL ANSWER
Here’s how I see it:
The UK — the operational opportunity is here, but not where the institutions went.
London and prime regional BTR at 2021 basis doesn’t work and won’t for years; that stock has to reprice through the hands of its current owners first.
But regional Britain — the 20-to-100-unit schemes, the secondary cities, the stock coming out of institutional portfolios at reset prices — is where the operational model pencils today. Honest today price entry, real today yields, structural tenant demand, and almost no competing capital.
That’s not a theory for us; it’s our lens for our lending book. And the scarcity is now compounding the maths: when completions hit a decade low against a four-million-home deficit, every unit that does get delivered is leasing into the tightest rental market in modern history. Read that again.
The Continent — regulation is the sorting mechanism.
Rent regulation in Germany, the Netherlands and parts of Iberia frightens the financial model — rightly, because a capped rent roll breaks a spreadsheet built on growth assumptions. But regulation punishes passive owners far more than operational ones.
If your returns depend on operating well — cost discipline, retention, efficient maintenance through technology vs analogue — a regulated market with chronic undersupply is a stable, almost utility-like business. If your returns depend on rent growth doing the work, it’s the proverbial trap. Same regulation, opposite outcomes, depending on which model walks in.
The US comparison — instructive, not importable.
The Americans ran the multifamily playbook through a full cycle and their capital — as I wrote before the summer — is now crossing the Atlantic with the lessons attached: they want operators, not single portfolios. Worth looking at and listening to. But the US model rests on the depth Europe doesn’t have — deeper debt markets, faster planning, standardised data. Import the operational discipline; don’t import the assumptions.
And like everywhere — the funding decides what happens next.
As I argued in the spring, capital is the mirror. The money returning to European residential is choosing evidence, discipline, and operators over massive AUM. That capital will fund the second model. It will not resurrect the first. Which means the regional answer to “can BTR deliver?” is really a question of where operational platforms exist for that capital to back. Britain has them, thinly. Much of the Continent doesn’t yet. That gap is the opportunity of the next five years.
THE QUESTION I’LL PUT TO EVERYONE
A panelist or co-chair’s job isn’t to pontificate knowledge — it’s to convene a conversation worth having. So rather than my answer, here’s the question I’d like to ask….
If we all agree the demand is structural, why did the last cycle’s capital lose money on it — and what exactly has changed in our underwriting since?
Some people will say rates — meaning they’ve changed nothing and are waiting for the old weather to return. Some will say entry price — halfway there. And a few will talk about operations, capex honesty, and what they now demand of managers — and those are the people whose next decade I’d underwrite.
Next week’s issue will recap what I’ve heard.
HARD LANDING
I’ve watched this industry rename things for forty years. Every cycle, the fashionable structure gets a fresh acronym, the capital floods in, and the distinction that actually matters — between owning assets and operating businesses — gets papered over until the cycle tests it. Acronyms are clever ways of saying simple things in my opinion, designed to make those who use them look smart.
BTR was never really a model. It was a name two models shared — one built on cheap money, one built on running buildings well. The cheap money is gone. The name will survive, because names do. I like another name actually; Mutli-Family but that’s no commonly used this side of the pond.
But when someone asks me in Paris whether the model can still deliver, my answer will be the one this newsletter has been building all year:
It was always been about the operator.
