The dial is shifting for Australian cities.
Consumer priorities have changed, placing increasing emphasis on the need for accommodation that's close to work, offers high quality amenities and guarantees security of tenure. In our latest report, we look at why build-to-rent holds the key to unlocking the future liveability of Australia's cities.
Population growth represents a significant challenge. Over the next decade (2019-2029), ABS dwelling projections indicate:
The problem is particularly acute in the short term. Across the Eastern Seaboard's inner-city markets, we only have 1.5 years' worth of housing demand in apartment supply that is under construction. There is a further 2.2 years of demand in the pipeline that is approved but not yet selling. A new approach is required if we're to retain our enviable liveability and economic productivity.
Build-to-rent (BTR) holds the key
Australian cities need a growing supply of high-quality rental accommodation. This will promote local labour mobility, house global talent and meet the demand for greater choice of housing across a variety of price points.
The benefits to all stakeholders are clear:
Governments can unlock its potential
With some key changes, Government can turn a ripple into a wave. BTR proponents in Australia aren't necessarily seeking more favourable concessions than other asset classes; they're simply seeking a level playing field.
What the government should consider:
- MITs: BTR should be given a level playing field - it should be reclassified as 'commercial residential' and allow foreign investors' returns to be taxed at a concessional rate of 15%.
- Land tax: under the current law, and on an asset-by-asset basis, States stand to gain more land tax revenue for BTR projects than Build-to-sell.
- Planning tools: the planning policies in each State can be used to ensure the BTR sector reaches its full potential in Australia.
- BTR and affordable housing: the pursuit of a thriving BTR market may have greater long-term effects on overall housing affordability in Australia than simply mandating components of affordable housing within the asset itself.
A ripple of momentum has started in this sector and if government policies can give it the level playing field it deserves, we will see the ripple turn into a wave.