Build-to-Sell vs Build-to-Rent: A Developer's Funding Breakdown
Property markets in the UK have changed dramatically over the last decade. Building-to-Rent (BTR) is a growing sector backed by institutional investors, private funds, and long-term rental demand - a sector formerly focused solely on Build-to-Sell (BTS) projects.
The funding structure, cash flow, risk, and exit strategy of both strategies can be profitable.
The guide explains each model, how it's funded, and how you can determine which option is right for your project.
What Is Build-to-Sell (BTS)?
Building homes for individual resale is called a "build-to-sell" development model. Within 12-36 months of sale, profits are generated.
Key Features of BTS:
Project profit at the end
Show homes, marketing, and sales agents are needed
Market sensitivity
The build requires strong cash flow
Potential for higher short-term profits
Typical BTS Projects:
- Buildings for single-family residences
- Residential projects of a small to medium size
- Blocks of apartments for private buyers
- Suburban or townhouse developments
Many developers still prefer BTS - especially those who want to recycle capital quickly.
What Is Build-to-Rent (BTR)?
Building for rent instead of selling is known as build-to-rent.
Rental income is derived from long-term rental yields, often backed by institutional investor demand.
Key Features of BTR:
Rent-based income model
High occupancy-driven value
An investor or fund typically owns the company
Strong appeal to pension funds and REITs
Lower exit risk compared to BTS
Includes amenities (gyms, coworking spaces, lounges)
Typical BTR Projects:
- High-demand apartment blocks
- Multi-unit urban schemes
- Major cities' private rental developments
- Residential-focused mixed-use buildings
There is a great deal of investor interest in the BTR sector, which is growing rapidly.
Funding Differences: Build-to-Sell vs. Build-to-Rent
1. Loan Structure
Build-to-Sell Funding Structure:
- GDV (Gross Development Value)-based development finance
- Loan drawn in stages (land, build, finishing)
- Exit via sale of units (single or phased)
- Higher leverage is often available for proven developers
Build-to-Rent Funding Structure:
- Development funding with rental income valuation considered
- Exit often involves refinancing into long-term investment loans
- May attract institutional equity or JV partnerships
- Due to lease-up periods, loan terms are sometimes longer
A BTR deal benefits from more favourable long-term funding, whereas a BTS deal focuses on short-term build-cycle financing.
2. Cash Flow Considerations
BTS Cash Flow:
- Building requires strong liquidity
- After units are sold, cash inflow occurs
- ROI can be hurt by sales delays
BTR Cash Flow:
- Upon moving in, rent stabilises
- Provides regular rental income
- Refinancing over time improves cash flow
Developers seeking recurring income should consider BTR.
3. Market Sensitivity
BTS:
Highly sensitive to:
- Mortgage rates
- Buyer confidence
- Market sentiment
- Sales cycles
BTR:
Market downturns are less pronounced because:
- Rental demand remains high
- Institutional investors favour long-term income
- Refinance options remain flexible
A BTR is often more stable and predictable in uncertain markets.
4. Exit Strategy
Build-to-Sell Exit:
- Individually sell each unit
- At completion, profit is realised
- Sale slowdown or price reduction risk
Build-to-Rent Exit:
- Refinance and retain units
- Invest in the entire block
- Strong rental income will result in a higher valuation
Instead of cycling out every project, many developers use BTR to build long-term equity.
Which Strategy Is Better for Developers?
Choose Build-to-Sell if:
- Capital returns should be faster
- Local markets favour homeowners
- Your marketing and sales strategies are strong
- Profits should be reinvested immediately
BTS is ideal for short-term profit and business liquidity.
Choose Build-to-Rent if:
- A long-term income is what you seek
- You target urban or high-demand rental markets
- You are looking for stable, low-risk investment returns
- Institutional partners are on your agenda
Long-term portfolio growth and reduced market volatility are ideal characteristics of BTR.
How Tapton Capital Helps with Both Models
Tapton Capital provides developers with the flexibility they need to make the right choice between build-to-sell and build-to-rent projects.
Our Funding Solutions Include:
Development Finance up to 90% LTC or 75% GDV
Bridging loans for land acquisitions or planning plays
Mezzanine finance boosting leverage for larger schemes
Equity Partnerships for BTR or long-term holds
Refinance & Exit Loans for completed developments
Our customised funding structures increase profitability, stability, and growth potential for every project.
Conclusion
Building to sell and building to rent both have strong advantages - the key is to select the strategy that best fits your timeline, risk appetite, and long-term goals.
Your project can be streamlined, your returns will be enhanced, and you will have the flexibility to take advantage of the best opportunities.
Tapton Capital offers tailored funding designed for speed, certainty, and growth across both models.
A Smarter Way to Fund UK Property Development with Tapton Capital.
FAQs
In BTS, profit is generated from sales of properties, while in BTR, income is generated from rentals with a longer-term exit strategy.
It has strong funding routes, but BTR is often attractive to institutional investors and can be refinanced over a long period of time.
The rental demand and yields for BTR are generally less market-sensitive.
We offer bridging, development, mezzanine, and refinancing solutions tailored to both models.
For long-term value, experienced developers may prefer BTR over BTS, which may suit new developers due to faster capital recycling.
Ready to Find the Right Funding Solution?
Don't let confusion between build-to-sell and build-to-rent hold back your property development. Get expert guidance and tailored solutions from Tapton Capital.
A Smarter Way to Fund UK Property Development with Tapton Capital.
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