The build-to-rent model is a more recent approach to rental provision that aims to attract investment and development whilst providing stock specifically for the rental market under unique conditions.
Although there are slight jurisdictional differences on what constitutes build-to-rent, it is effectively a large strata-type arrangement that is run under a singular management structure that provides extensive rental housing that cannot later be sold or subdivided. To draw investors towards partaking in build-to-rent projects, various governments locally and abroad have provided attractive tax concessions and planning arrangements that often supersede existing schemes to quickly facilitate new developments.
The REIA recently delved into the built-to-rent model in their report Build to Rent: A Market Analysis, an assessment put together in collaboration with the commercial property management software platform Re-Leased. In their report, the REIA characterised the build-to-rent model as, “simply rental stock held in company ownership, usually in medium to large sized multi-dwelling apartment style buildings. In addition to local institutions, smaller local private developers and major offshore investors are also entering the market with new developments, in many cases in partnership with one another.”
It should be specified that that build-to-rent model is not necessarily a sector developed with affordability in mind; it is geared more towards the renters that occupy the higher-end bandwidth of income. Whilst a government report demonstrates that all varieties of tenants may live in built-to-rent developments, members within its working groups indicated an appeal for built-to-rent developments due to the assumed:
• communal and open space required;
• higher-end service offering provided;
• greater level of additional services; and
• quality of the finished development.
From an estate agent’s perspective, if they are seeking higher-income renters under their property management portfolio, the build-to-rent model is an attractive proposition. As the sector continues to expand, particularly given the government’s commitments to densification under its Housing Statement alongside an increasing nationwide demand for rental stock on the market, build-to-rent property management will become a more common responsibility amongst agents with plenty of room for growth opportunity.
To encourage investment and foster growth within the sector, the Federal Government has announced proposals around tax concessions for build-to-rent dwellings to introduce more capital into the sector. As the national representative body for the real estate sector, the REIA made a submission to the federal government on behalf of the industry on its impressions over the proposal that is being considered. That submission can be found here.
The REIV will continue to provide informative updates on the build-to-rent sector, including local trends, legislation, and how it fits into the broader housing agenda. As a pivotal piece of the national housing puzzle with a focus on property management potential, the build-to-rent model will continue to factor into the interests of the REIV and its membership.
