The Best Property Development Strategies in the UK right now

As the UK property market continues to grow in 2025, developers and investors are seeking innovative ways to generate returns while adapting to shifting market dynamics, regulatory changes, and growing housing demand. Below, we explore some of the most effective property development strategies shaping the market right now including build-to-rent schemes and small HMOs to airspace developments and joint ventures and which one is the best suited for you looking to invest.

1. Build-to-Rent (BTR) Schemes

Build-to-Rent (BTR) refers to developments specifically designed and managed for the rental market. Unlike traditional buy-to-let (BTL) properties, which are typically owned by individual landlords, BTR projects are often owned and operated by large institutions or development companies. This makes BTR one of the fastest-growing sectors in the UK property landscape today.

A common example is the transformation of underused commercial buildings into high-spec rental developments, such as those around the Queen Elizabeth Olympic Park in East London. This trend highlights how idle properties can be redesigned and developed while meeting the UK’s pressing housing needs.

Favourable tax and regulatory conditions have accelerated BTR growth. For instance, institutional investors in build-to-rent schemes often avoid the 3% Stamp Duty Land Tax (SDLT) surcharge applied to individual landlords. In contrast, private investors have faced tighter regulations and higher costs due to changes in energy efficiency standards, capital gains tax, and increased stamp duty on second properties.

From a financial perspective, BTR can be seen as more stable and profitable over the long term. Instead of relying on quick property sales, and the other issues which comes with BTL’s, developers benefit from steady rental income and consistent demand making this sector particularly attractive to institutional investors seeking predictable, lower risk returns.

2. Small HMO (House in Multiple Occupation) Schemes

A House in Multiple Occupation (HMO) is a property rented out by three or more unrelated individuals who share key facilities such as kitchens, bathrooms, and living spaces. Small HMOs typically accommodate between three and six tenants and fall under Class C4 planning use. Larger HMOs (with seven or more occupants) require additional licensing and are subject to stricter safety and planning regulations.

Why Small HMOs are attractive in 2025:

• Higher rental yields: HMOs are rented on a room-by-room basis, providing multiple income streams from a single property and often outperforming traditional BTL yields.

• Lower vacancy risk: If one tenant moves out, income from remaining occupants helps maintain cash flow stability.

• Strong tenant demand: With the UK’s ongoing housing affordability crisis, HMOs remain in high demand among students, key workers, and young professionals seeking flexible and affordable accommodation close to urban centres.

• Rising quality standards: Although HMOs face tighter local regulations and safety requirements, this has elevated the overall standard of the sector. Well-managed HMOs today are typically safer, cleaner, and better maintained than ever before.

Given their resilience and consistent demand, small HMOs continue to be a compelling development and investment strategy for 2025. However, landlords should factor in higher management needs, compliance costs, and ongoing regulatory oversight before embarking on a new HMO project.

3. Airspace Developments

Airspace development is an innovative strategy that involves building new homes or apartments in the unused space above existing buildings. Essentially, it transforms rooftops and “air rights” into valuable real estate. This is particularly appealing in high-density urban areas like London.

From a sustainability perspective, airspace development is a smart and a space-efficient solution. Instead of consuming new land, developers can extend vertically, reusing existing infrastructure and reducing environmental impact. This approach supports urban growth while preserving green spaces and minimising disruption to surrounding areas.

Advantages of airspace development include:

• Ideal for dense city locations where land availability is limited.

• Can significantly increase the overall value of a property.

• Supports sustainability goals by reusing existing building stock.

• Potential for both residential and commercial uses, contributing to local economies.

At Hybrid Financial, we’ve seen firsthand the potential of airspace development projects — delivering value both for developers and the communities they serve. With supportive planning policies and technological advancements in modular construction, airspace projects are set to play a bigger role in meeting the UK’s housing targets. (Link to article on goodmayes flat).

4. Joint Ventures

A Joint Venture (JV) is a collaborative agreement between two or more parties, typically between developers, investors, and landowners, to pool resources (capital, land, or expertise) in order to purchase, develop, or manage a property. Profits and risks are shared proportionally according to each party’s contribution.

Why JVs are gaining traction in 2025:

• They enable access to larger and more complex projects by combining financial and operational strengths.

• Each partner brings unique skills or resources, from development experience to local planning knowledge or funding capability.

• They offer diversification benefits, allowing investors to explore new property types, markets, and geographies while mitigating risk through shared ownership.

Joint ventures are particularly useful for build-to-rent and commercial-to-residential conversions, where scale and capital intensity can be barriers for smaller developers.

However, success depends heavily on due diligence and partner alignment. Before entering a JV, it’s essential to:

• Conduct a full assessment of your partners’ financial stability, liquidity, and creditworthiness.

• Ensure all parties share the same vision, goals, and risk appetite.

• Clearly define governance structures, decision-making processes, and exit strategies.

When structured carefully, a joint venture can unlock significant development opportunities that might otherwise be out of reach for individual investors or developers.

Conclusion

The UK property market in 2025 offers diverse opportunities for investors and developers who are willing to adapt and innovate. Each strategy mentioned offers it owns pros and cons. While economic pressures and regulatory changes continue to challenge the sector, they do offer opportunities particularly in strategic financing and partnerships. 

At Hybrid Financial, we recognise that property development is much about strategic financing as it is about development vision. Weather you are considering build-to-rent opportunities, exploring a joint venture, or looking for funding for a HMO or airspace development, specialised mortgage and development finance advice can make the difference between a good investment and a great one.