The Leeds South Bank scheme, known as Fabrik, will provide 216-homes in a 12-storey block.
It is being developed by Leeds-based Oakapple Group and forward funded by landlord Grainger.
The project, which forms part of the Holbeck Urban Village, is anticipated to complete in late 2021.
Helen Gordon, Chief Executive of Grainger, said: “We are pleased to announce start on site of our latest investment in Leeds, one of our target regional cities, which will deliver 216 new high quality, purpose built rental homes.
“Fabrik will complement our 242-home Yorkshire Post development, also in Leeds, thereby providing over 500 PRS units in Leeds once these schemes are delivered.”