Can ‘Build to Rent’ help rebuild the affordable housing market?
With the property squeeze leaving more and more Australians well and truly out of the market, eyes are turning to a model that has enjoyed decades of success in Europe and the US – Build To Rent.
Many developers already build residential projects and hold onto key components to lease and manage themselves, such as the ground floor retail or office space components of larger residential projects.
But the theory behind Build To Rent is that having a single owner maintaining an entire residential building results in a more coherent residential offering with stable rent and a longer-term, responsible approach to maintenance and amenities.
It means there are more properties on the rental market at a much more affordable rate, particularly when the developer has a preferable long-term rental income strategy with the economies of scale.
Of particular interest is the alignment of Super Funds with Build To Rent projects. This kind of institutional-level investment not only provides steady returns but, when a reasonable approach to ROI is implemented, benefits the communities in which these projects are created.
Any strategy that enables more people to afford a place to live should be supported.
Having spent the best part of a decade involved in the property and development space, we’ve seen just how volatile the market can be in house and land as well as apartments. Any strategy that enables more people to afford a place to live should be supported. The current fractured market of individual mum and dad investors may not be sustainable, and an approach that makes housing affordable and leads to lower household debt can only result in a stronger economy.
Of course, the reason Build To Rent works in other parts of the world is that Governments are creating conditions and financial agreements to help make it happen. For example, the US Government offers tax credits for developers who create such projects, which, in turn, help them offer those properties at a lower rent than would have been possible for private landlords and investors to achieve.
For the Build To Rent model to thrive in Australia, not only will developers have to embrace the idea, the Federal Government will also have to play along by eliminating or reducing the hefty tax constraints that the private sector is currently subject to.
Should that happen, we could well see a much-needed boost to the number of affordable, quality homes of all kinds across Australia and a shift towards housing that is as much about people as it is about profits.