Australia’s housing situation is challenging. Many people with lower incomes are struggling to find affordable homes, and the waitlist for government-supported housing is growing longer. To make matters worse, household incomes need to catch up with the ever-rising home prices, leaving many Australian families struggling to secure a place they can call home.
Enter Build To Rent (BTR), a potential game-changer that is gaining significant traction in a housing market struggling to meet the needs of its citizens. Unlike traditional “build to sell” structures, BTR developers typically retain ownership of properties and lease them out to tenants. The number of investors targeting BTR has grown exponentially over the past years, and for a good reason: these developments promise lucrative profits for developers. While more established in other global markets like the United States, Europe, and Japan, BTR is steadily becoming a sign of hope in Australia’s property landscape.
But, getting BTR off the ground in Australia wasn’t easy, mainly due to tax issues. Yet, recently, the government has stepped in with state and federal tax incentives to boost BTR investment, especially for international investors using managed investment trusts.
These encouragements are having an impact, and experts predict that over the next ten years, 175,000 new homes could be added through BTR. However, as borders open up and more Australians turn to renting, the question lingers: will this be enough?
Challenges & Benefits
While BTR offers stability to renters, its affordability remains a substantial concern. Most BTR projects target middle- to high-income earners, with rents often exceeding market rates to ensure profitability for investors. This leaves a vast portion of the population struggling with unaffordable housing possibilities, paradoxically deepening the affordability crisis it aimed to address.
However, BTR could provide more options for people who choose to rent for life. With BTR, tenants have the freedom to stay in their homes without the worry of sudden property sales or unexpected rent hikes, providing much-needed stability, especially for those with families or fixed incomes. Additionally, it might also help to diversify the rental market and make it more competitive as BTR developers possess the financial power to create large-scale projects that individual landlords can’t match, enhancing options for renters.
Furthermore, BTR is gaining popularity not only due to its typically attractive inner-city locations but also because it offers a wide range of amenities, communal areas for leisure and activities, concierge services, and enhanced security.
What lies ahead for BTR:
The success of BTR will largely depend on its ability to reach a large percentage of the population and provide genuinely affordable housing options, all while delivering the promised benefits of stability and convenience. And although it is unlikely to improve conditions in the market in the near term, it has the potential to provide a substantial number of homes in the future.
As we explore the possibilities of Build-to-Rent, we’re moving towards a future where homeownership is not a distant dream but an achievable reality for everyone. It’s an opportunity to address Australia’s housing crisis and make positive steps toward the solution we’ve all been waiting for.
Micaela Abraldes is PR & Internal Communications Coordinator at WT