Environmental, Social and Governance (ESG) is changing the UK’s Build-to-Rent (BTR) landscape. With 73% of British institutional investors prioritising ESG and tenants favouring sustainable developments, ESG is now a key factor in construction decision-making.
For contractors operating in the competitive BTR sector, integrating ESG delivers real benefits. Higher project values, access to capital, higher tenant retention in high-demand areas, and future-proofed assets are all advantages found by meeting regulatory compliance.
This fundamentally changes how successful BTR projects are designed, built and managed.
Building Better: Environmental Innovation
Regulatory changes and market expectations are driving environmental innovation. Some BTR developers are not just complying with current standards but also anticipating future requirements.
Energy
Energy is the key focus. Leading contractors are now designing building envelopes that exceed current requirements.
While providing environmental measures, advanced thermal bridging solutions, meticulous airtightness detailing, and high-performance glazing also reduce operational costs and improve resident satisfaction with improved comfort.
Water
Effective water management is now a more prominent consideration in BTR developments, especially in water-constrained areas like South East England.
Rainwater harvesting for landscape irrigation, greywater recycling for toilet facilities, and water-efficient fixtures that meet top-tier WRAS standards are the solutions.
Waste
Construction waste has always been a by-product of construction. This mindset is changing.
Structured segregation processes and specialist recycling partnerships now consistently divert over 95% of waste from landfills.
This isn’t just good for the environment, either. It actually reduces project costs by up to 18%.
Carbon Footprint
Carbon is a constant environmental challenge.
Practical carbon assessment methodologies throughout design and construction are a more forward-thinking approach that balances immediate project needs with long-term performance, critical for developments that will operate for decades.
Beyond Bricks and Mortar: Creating Communities
BTR residents now want more than modern buildings. With more options for would-be tenants in different areas, people are looking for higher-quality amenities that create social interaction between residents and improve tenant retention.
This requires a different approach to traditional development. The industry has moved from building broad amenities without much understanding of the audience who may be using them.
Today’s successful BTR developments have carefully targeted facilities based on demographic analysis and local context.
For example, in city centre projects, this means co-working spaces and creative amenities that benefit professional lifestyles. In a suburban development, it means addressing specific lifestyle needs such as family-friendly amenities.
Health and wellbeing
The pandemic has changed forever how we think about health and well-being.
Things like enhanced ventilation and air quality management systems, once a premium feature, are now standard in high-performance developments. Air quality management no
Similarly, biophilic design has evolved from token planting to fully integrating natural elements throughout interiors.
Entertainment Spaces
Entertainment amenities are now differentiators in the Build-to-Rent sector.
Cinema rooms are featured in many mid-to-premium developments across the main UK cities, game rooms and flexible social areas in schemes targeting specific demographics.
What’s interesting is how these spaces are being approached.
The sector has moved from viewing entertainment amenities as marketing features to understanding them as community-building tools that directly impact resident satisfaction and retention.
Cost-effectiveness is key. Data shows that strategic investment in fewer, higher-quality entertainment spaces often delivers better ROI than multiple underutilised facilities. This is another step in the maturation of the UK Build-to-Rent sector.
Accessibility and Inclusion
Accessibility in BTR has improved significantly beyond compliance requirements.
According to recent industry research, properties with 10-15% of units with enhanced accessibility features consistently outperform commercially, attracting a broader resident base and higher occupancy rates.
These purposefully designed spaces appeal to residents with mobility needs, older demographics and families with young children, widening the tenant pool.
Multigenerational design is perhaps the most forward-thinking aspect of this trend.
By incorporating flexible layouts, adaptable features, and futureproofing elements, developments can accommodate changing resident needs throughout different life stages without requiring relocation.
This has proven to reduce turnover and create community stability, a key factor in operational profitability.
Getting the Governance Right
Successful BTR developments depend on robust governance frameworks from construction to operation. This isn’t bureaucracy. It’s fundamental to long-term performance. These systems provide data to stakeholders while meeting compliance and disclosure requirements.
Supply Chain Monitoring
Supply chain scrutiny has increased, especially post-Brexit. Best practice now means substantial assessments of suppliers against criteria such as modern slavery, carbon commitments, and material provenance.
While mitigating risk, the resulting deeper due diligence has proven invaluable in securing materials during times of supply constraint.
Building Safety Act
The updated Building Safety Act has changed quality assurance in the living space sector.
The new regulatory framework and its gateway structure provide a more robust oversight system in the design, construction, and completion phases.
High-level developments now include digital record keeping, which creates the detailed “golden thread” documentation required for regulatory compliance.
The Numbers Add Up
The financial case for ESG in Build-to-Rent is strong and well evidenced.
Capital markets are getting better at assessing ESG performance. Developments with strong ESG strategies now get preferential lending rates. Recent projects have achieved 15- 25 bps cost savings through sustainability-linked loans.
These structures tie interest rates to performance metrics and create financial incentives for environmental and social outcomes.
Operational cost benefits add to the case.
Developments with modern energy systems typically consume 30-40% less energy than minimum compliance buildings, which translates to improved net operating income and asset value.
Leasing Performance
The leasing performance of ESG-optimised developments tells its own story.
Projects with strong ESG credentials are leasing up faster. Recent schemes are 20-30% quicker than comparable non-ESG developments.
Retention rates are also improving, ESG-focused schemes are experiencing 15% lower turnover, reducing void periods and remarketing costs.
Financial Impact
The financial impact on market values is becoming more evident.
Analysis shows buildings with superior ESG performance are achieving 25-50 basis points yield compression versus standard Build-to-Rent assets.
This reflects investors’ perceptions of reduced risk and stronger growth potential in ESG-focused developments.
For developers and owners, this means yield benefit translates to larger capital values, the key performance metric that drives investment decisions.
An ESG Case Study – Hove Gardens, Brighton
RG Group were contracted by Watkin Jones Group to undertake the construction of a new residential development at Hove Gardens, Brighton in East Sussex.
The development includes a basement car park with 31 spaces, divided into 4 accessible parking bays for the Commercial Unit and 27 bays for residential use (18 accessible parking bays and 9 visitor bays).
Facilities within the building include cycle storage, refuse storage, plant accommodation, and a dog washroom.
The two largest external amenity decks are located on the first floor, offering spaces for both active and passive use where residents can meet, gather, and socialise. These first-floor amenity spaces include:
- Double-height reception and lobby area with seating
- Flexible work-space
- Lounge area
- Pool room
- Dining/seating area
- Outdoor amenity deck
- Screened the resident’s terrace
- Varied seating
- Planting for seasonal variation
- Outdoor climbing frame
- Allotments
These thoughtfully designed spaces create opportunities for community building while providing residents with diverse recreational and functional amenities.
What’s Next for ESG in Build-to-Rent?
Several key trends will continue to shape ESG in the UK residential sector.
Net Zero Carbon
Net-zero carbon is moving from aspiration to reality. Leading developers are doing whole life carbon assessments and setting science-based targets in line with the UK’s 2050 commitment.
This deadline will likely accelerate as investors start to include climate risk in their valuations and create a two-tier market between carbon-optimised and non-carbon-optimised developments.
Circular Economy
Circular economy is going beyond waste management to structured design approaches.
Disassembly, material passports and spaces designed for evolving requirements, promoting sustainability while providing practical benefits for building lifecycle extension, are often seen as critical for investors.
Social Value
Measuring social value is becoming more precise, shifting from general assessments to actual data and numbers.
Industry standards such as National TOMs (Themes, Outcomes and Measures) are now being applied to housing developments. This allows tracking and reporting of community impact in a structured way, showing real positive impact that extends beyond the building.
Next Steps
ESG has changed how Build-to-Rent projects are planned and delivered, moving from a secondary consideration to core project strategy. The business case for ESG is no longer just theoretical as real world results can now prove it improves returns.
Projects across the UK residential sector show that effective ESG implementation must be considered from the start of planning. A full approach delivers immediate benefits and sets the foundation for long-term performance.
For developers in this space, partnering with contractors who understand ESG implementation is key to success. The best projects use early collaboration, data driven decisions and structured delivery processes to deliver great outcomes for investors, residents and the wider community.
RG Group – Build-to-Rent Developers
RG Group is a leading UK contractor specialising in large-scale Build-to-Rent developments across major urban centres.
With over £300 Million of Build-to-Rent projects completed or on site, we deliver project certainty with an ESG focus to create exceptional living spaces that deliver outstanding returns for our clients.
Our team work with developers from design stage through to completed buildings, offering specialist expertise in sustainable construction methods, community building strategies and governance structures designed for Build-to-Rent projects.
For more information on our approach to Build-to-Rent development, contact our team at info@rg-group.co.uk.
