July 8, 2019
Build-to-rent policy faces uphill struggle without tax
and regulatory reforms
A UNSW report says that governments need to equalise land taxes and GST treatment if build-to-rent (BtR) apartment blocks are to be feasible in Australia at scale.
BtR developments are purpose-built for rental use usually at market rates. Owners include insurance companies, super funds, private equity firms or developers.
But the City Futures Research Centre report recommends that governments level the
playing field for BtR projects so that they can compete with mum-and-dad
investors and traditional build to sell developers.
“In Australia where our private rental market is almost entirely owned by small-scale mum-and-dad investors, this kind of housing would be a largely new departure,” Professor Hal Pawson from the City Futures Research Centre in UNSW Built Environment says.
“As a form of housing largely unaffected by uneven demand, it could help to create more stability in the construction industry, countering damaging booms and slumps.”
Other possible BtR benefits include the effect of having a building-commissioning company as the long-term owner – thereby creating an incentive for higher build quality and more enduring performance. Beyond this, it could enhance housing diversity in our rather polarised market, as well as bringing about higher management standards and a more secure form of private rental.
Ideally, market-rate BtR developments would also include a proportion of homes affordable to low to moderate income earners. This could be most suitably provided via not-for-profit community housing organisations which can develop affordable rental housing at lower cost than for-profit companies. But this would still need additional government support in some form – such as designation of ex-government land at a discounted price.
“For example, such a principle could be factored into large-scale urban renewal projects such as Sydney’s Central-to-Eveleigh and Rozelle Bay,” Professor Pawson says. “This could fulfil the demand that developments of this kind should routinely include 30% affordable housing.”
Contact: Professor Hal Pawson on 0421 335 628.