BTR vs BTS: Funding Strategies for Maximum ROI
A build-to-rent development model (BTR) and a build-to-sell development model (BTS) dominate conversations within the UK property market today.
Both have high profit potential, but their funding structures are completely different.
You will lose money if you pick the wrong funding strategy.
Your project will be more profitable, predictable, and scalable if you choose the right one.
Here, Tapton Capital breaks down the key differences between BTR and BTS, explains how funding works for each model, and shows how the right finance structure can maximise ROI.
What Is Build-to-Rent (BTR)?
The purpose of build-to-rent developments is to generate long-term rental income for a single landlord, fund, or investment group.
Key Features:
- Income generated from ongoing rental yields
- Lower exposure to market downturns
- High tenant demand in major and regional cities
- Often includes amenity-rich designs
- Strong interest from pension funds and institutions
Who It Suits:
- Long-term investors
- Developers seeking stable returns
- Funds looking for predictable income streams
Having consistently high income and long-term capital appreciation has driven BTR's rapid growth.
What Is Build-to-Sell (BTS)?
Build-to-Sell focuses on constructing homes to be sold individually once the project is complete.
Key Features:
- Profit realised at the time of sale
- When the market is favourable, returns are strong.
- Quicker capital recycling
- An increased sensitivity to buyer demand and interest rates
Who It Suits:
- Short-term turnaround developers
- Fast-returning investors
- Strong local sales demand aligned with projects
Developers seeking short-term profits and fast reinvestment continue to favour BTS.
BTR vs BTS: Key Funding Differences
Finance structures are different depending on the strategy. The following is how lenders assess each one:
1. Loan Structure
BTR Funding:
- Supports long-term income-focused projects
- Usually refinanced into an investment facility
- Rent-based valuation (yield-based valuation)
- Institutional equity is often available.
- Longer funding terms
BTS Funding:
- GDV-based standard development finance
- Project progress-linked drawdowns
- Exit through the sale of units
- 12-24 month short-term financing
2. Cash Flow Requirements
BTR:
Once the scheme is leased, income is generated.
As a result, BTR often uses both:
- Senior development finance
- Institution-backed equity or mezzanine finance
BTS:
Upon completion or even off-plan, revenue arrives immediately.
The project's backend cash flow is stronger.
3. Valuation Method
BTR Valuation:
- Based on rental yield
- Long-term stability often results in higher valuations.
- Attractive to funds and REITs
BTS Valuation:
- Based on open market sale values
- An interest rate- and buyer-sensitive market
Valuations of BTRs are usually more stable.
4. Exit Strategy
BTR Exit:
- Long-term refinance
- Forward funding or forward purchase
- Retain and operate the building
BTS Exit:
- Sale of individual units
- Bulk sale to investors or housing associations
- Profits released upon completion
The total return on investment depends on the exit structure you choose.
Maximising ROI With the Right Funding Strategy
1. Use Development Finance for BTS Projects
With flexible staged development financing, BTS works best.
Tapton Capital BTS Funding Benefits:
- Up to 75% GDV
- Up to 90% LTC
- Fast drawdowns
- Launch support for marketing and sales
- Refinancing options if sales slow
BTS finance is the most effective structure for developers who want to recycle capital quickly.
2. Use Blended Finance for BTR Projects
To optimise ROI, BTR requires a more layered structure.
Tapton Capital BTR Funding Strategy Includes:
- Senior development finance
- Mezzanine finance (to reduce your equity input)
- Institutional equity partners
- Long-term BTR refinance
- Forward funding agreements
Blending these stacks reduces upfront capital while maximising overall returns.
3. Consider Forward Funding to Reduce Risk
In BTR, forward funding is powerful.
Lower equity requirement
Reduce your upfront capital input.
Reduced development risk
Secure exit before completion.
A guaranteed buyer
Institutional investor commitment.
Improved ROI certainty
Predictable returns from day one.
Developers who wish to increase profitability and reduce risk can turn to Tapton Capital for forward funding.
4. Maximise Equity Recycling
The key to scaling BTR or BTS is refinancing.
After completion:
- BTS: Recycle profit into the next project
- BTR: Refinance on a yield-based valuation for higher leverage
Developers grow portfolios faster this way.
BTR vs BTS: Which Delivers Higher ROI?
BTR Delivers:
- Stable returns
- Long-term income
- Lower risk
- Strong institutional demand
- Higher valuations in certain markets
BTS Delivers:
- Quicker profits
- Faster capital recycling
- Higher margins in strong sales markets
- Ideal for short-term development pipelines
There is a great deal of ROI in both - but for very different time frames.
How Tapton Capital Helps You Choose the Right Strategy
We provide bespoke funding and advisory services for both BTRs and BTSs.
Funding up to 75% GDV
Maximum leverage for your project.
Staged development finance
Flexible drawdowns as you build.
Mezzanine and equity partnerships
Reduce your equity requirement.
Expert project assessments
Strategic advice on your model.
Help with exit planning
Maximise returns at completion.
Fast decisions and transparent terms
No hidden fees or delays.
Whether you need short-term profit or long-term rental income, Tapton Capital ensures your funding strategy maximises return on investment.
Get Expert Funding Advice Today
Speak to Tapton Capital about choosing the right development model and funding structure to maximise your ROI.
Talk to a SpecialistConclusion
Building-to-rent and building-to-sell can both deliver excellent returns - but only if they're backed by the right financing.
Developers who build long-term strategies consider cash flow, market conditions, risk, and long-term goals before choosing one model.
In both models, Tapton Capital offers flexible, tailored funding.
Smart Funding Strategies for Smarter ROI - Tapton Capital.