Build to Rent (BtR) or Institutional Build to Rent (Inst-BtR) is a new asset class made for Aussie investors and homeowners seeking a fast-growing opportunity in the residential rental market.
Welcomed by all in renting, the industry is finally taking care of the long-termer (we are growing faster than the dwellings to accommodate us) who is now at the forefront of the government, building and planning industries minds.
One single entity operates a new rental dwelling
that deals directly with each new tenant.
Essentially, Build to Rent will see us developing and managing residential communities in sought-after city locations.
As both the developer and landlord, we’re able to deliver a completely new property experience, one designed to remove the downsides that typically come with renting.”
Mirvac calls it a revolution in renting for Australians.
Capped rent increases with inhouse gyms, gardens and activities to bring people together in a village atmosphere of like-minded home renters. Book a film at the onsite cinema or take care of business in the co-working spaces all within the one complex.
Community, green and sustainability focused. Top-notch appliances, white goods, and service connections inclusive, if you’ve ever wanted to call maintenance like on a US sitcom in house, now you can.
Home is the keyword – for the first time, you can even paint your rental the way you like it, plus it’s the most pet-friendly rental home on the market, ever.
Could our rental future finally make some sense
and offer the security of ownership?
Catering only to Aussie renters, Mirvac’s Liv and several other building companies alike are currently offering homes for as long as you want. No short term stays ever again in your selection of 1, 2 and 3+ bedders.
These rental properties are available now throughout the country, with Melbourne leading the way and Sydney not too far behind in releasing these new rental opportunities.
It is a no brainer that we as renters will hugely embrace this new rental model.
As a long term renter, it’s a breakthrough in Australian residential leasing that has been missing for decades, and I, for one, cannot wait to move in.
It is going to be the game-changer renters will love!
BtR Stats by the Property Council of Australia
- The current pipeline of institutional build-to-rent, or Inst-BtR, projects could contribute $7.3 billion in total economic output between 2022 and 2025, boost GDP by $2.9 billion, and support around 17,610 jobs, says EY.
- The asset class does, however, face significant regulatory and taxation barriers before it can reach this potential – most notably around land tax and managed investment trusts.
- Victoria currently accounts for more than 60% of Inst-BtR projects, but uncertainty around land tax is a handbrake holding the sector back,” says lead for build-to-rent, Luke Mackintosh.
Victoria currently accounts for more than 60 per cent of Inst-BtR projects. This amounts to 9,800 apartments with a capital works value of $4.74 billion.
“The majority of projects are in Victoria because Inst-BtR can work better there than in any other state,” says Mackintosh, pointing to Melbourne’s lower land costs than Sydney, faster planning and favourable demographics. “But uncertainty around land tax is holding the sector back.”
In last year’s budget, the Victorian Government announced its intention to introduce a 50 per cent land tax discount over 20 years for eligible projects. While it said the expected start date would be the 2022 land tax year, the industry is still waiting for eligibility criteria to be clarified.
An International ‘snapshot’ of BtR by Lexology
BtR projects are renowned for offering a higher-end specification of apartment in a central business district, as compared to BtS equivalents. To attract tenants, the projects include a superior amenity (with, for example, up to 5–6 sqm of amenity per apartment compared with roughly 1 sqm as compared to similar BtS products), with tenants tending to be young professionals (between the ages of 26–40).
It is also common for government policy to incentivise affordable housing facilities within BTR projects, typically for a fixed percentage of the occupancy.
BtR buildings come in many varieties, often incorporating ‘mixed use’ programming with retail and/or office space (including co-workspace) as part of the development.
BtR projects can also be built within a broader ‘precinct’ which includes public amenity such as green spaces.
The BtR model is well established in the United States and the United Kingdom. (BtR is known as “multi-housing” residences in the United States).
From January 2021 to April 2021 alone, more than £1.2 billion was invested in the UK BtR sector.
By contrast, the Australian sector is only just emerging, but is building pace with the nation’s pipeline of projects expanding by 68% in 2020.
Instarent accommodates these property management solutions and is the ideal place to find your next long term tenant.
Until next time and thanks for yours!