News

'Build-to-rent' property sector could be an answer to housing affordability

01 September 2017

The fight to improve housing affordability in cities like Melbourne could well be helped by the development of a ‘build to rent’ sector.

Build to rent means developers build housing and then retain the building to rent it out to lower-income families.

Instead of a developer building a project then selling it for a profit, a developer gets backing from an institution such as a superannuation fund to build for the long term and rent out at a cheaper rate.

NSW Treasurer Dominic Perrottet has just begun a working group to assess the viability of the idea as it gains momentum and media attention.

The build-to-rent sector has been growing quickly in London and the United States.

According to Matthew Cranston in the Australian Financial Review if you took the percentage of institutional investment in residential property globally and applied that to Australia you would have a potential $7 billion to be invested.

MSCI’s Bryan Reid says if the build-to-rent model did attract that sort of institutional capital it would mean around 30,000 new apartments being built to rent in Australia that would significantly improve housing affordability.

For the build-to-rent sector to get a foothold it would need some changes to taxes which currently hold it back in Australia, unlike overseas where they don’t put constraints on build-to-rent developers.

Latest

If you need access to fast short-term capital did you know that bridging finance could be an option?

Read more

The Reserve Bank has warned house prices are at risk of falling if the banking royal commission ends up causing banks to restrict the amount of money they are willing to lend.

Read more

On the weekend our city recorded a clearance rate of 60.7 per cent and for the weekend prior, the auction clearance rate has been revised down to below 60 per cent – to 58.9 per cent.

Read more

This year’s Federal Budget includes a plan to help up to 20,000 older Australians stay in their own home but some say it contradicts policies designed to free up housing.

Read more