RANT: Build-to-rent flats offer real choice

There are some people who hate the idea of build-to-rent, although it’s a simple concept with potential to make a serious dent in the housing crisis.

Last September the Coalition argued Labor’s Build to Rent scheme was aimed at increasing the of number rental homes in the Australian market by providing tax cuts for the construction of rent-only developments, saying the scheme was a sign the “Albanese government has given up on home ownership” and would benefit institutional investors more than perspective homeowners.

The Greens also objected on the grounds that it favoured developers and investors over tenants and would “not do a thing to fix the housing crisis,” flagging issues with the amount of affordable homes which would be built under the scheme.

The legislation had since been delayed but, following the Labor Party’s landslide win in the last election, an exposure draft legislation has been released, promising build-to-rent income tax concessions that were originally announced in the 2023-24 Budget.

While the federal legislation is progressing, some states have moved ahead with their own measures. Western Australia passed the Land Tax Assessment Amendment (Build-to-Rent) Bill 2023, providing a 50% land tax exemption for up to 20 years for eligible build-to-rent developments and NSW is introducing a land tax discount for new build-to-rent housing projects.

So  what is it? And why are people so sharply divided over it?

How it works is a developer builds a block of units, then, instead of selling them, delegates a management company or in-house team to rent them out.

In some ways it sounds like the opposite of strata.  There may be an advisory committee but they don’t make any major decisions.

There are rules but they are based on the community’s needs rather than the personal obsessions of individual committee members.

Tenants have long leases and can often decorate any way they want. Repairs and maintenance are carried out and paid for by the managers.  If there are defects, they’re the developer and builders’ problems.

Disruptive residents are told to behave or they are shown the door and there’s less endless faffing around with mediation and tribunals. Airbnb and its ilk are not allowed.

There are no levies (although rents are a bit higher than average) and there’s certainly no special levies for unavoidable repairs.

What the residents don’t get is ownership of their homes. They also don’t get crippling mortgages or worries about maintenance issues that have been ignored for years.

As for investors, they may well be doing that already and not know it. Superfunds love investing in these projects, especially if they have an element favouring essential workers like nurses, firies, cops and teachers.

With almost 6000 new build-to-rent homes slated by just one company for construction by 2030, this is an area of housing that’s destined to grow and grow.

It won’t solve the housing crisis but it is another game-changing puzzle piece in the bigger picture.

As for the nay-sayers who never fail to allow perfection to be the enemy of good, build-to-rent offers an opportunity to change our collective mind-set and specifically the obsession with owning property.

It offers another choice rather than being shackled by the idea that if you don’t own your home you have failed – a concept that makes no sense when demand outstrips supply to the extent that it does now and will for the foreseeable future.

And it give long-term renters an opportunity to find a home where their landlords aren’t penny-pinching amateurs, hiding behind do-nothing rental agents, and interested only in their returns on investments.

It’s not for everyone but home ownership doesn’t represent freedom – being able to make choices does.

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