For a company to manage a large number of tenants, the tenants have to be fairly high-quality. Ones who need a lot of management are just not a viable proposition. Management is expensive. So the company will be very selective about whom they house, with a particular preference for tenents who are in regular employment.
That will rule out many poor tenants. So such tenants will be thrown back into charity housing, which will often be problematic for them, if they can access such housing at all. So the projects described below will not have much impact on the rental shortage.
The only real way out of the shortage is to incentivize private landlords. But the brainless Left are more likely to handicap landlords with onerous regulations. I own a spare apartment that I could let out but I do not do so as I don't like the complications I would risk. I prefer to keep it available for occasional family use
A rapidly growing part of the housing market worth more than $100 billion over the next decade is set to revolutionise how Australian renters live.
Ordinarily, property developers bring a project to life with the intention of selling dwellings to buyers or investors at the end to make a profit, but a new scheme turns that traditional model on its head.
Build-to-rent (BTR) describes the development of an apartment complex with the express intention of retaining all those dwellings to lease them out. It’s a well-established model in the United States and the United Kingdom but is still in its infancy in Australia – but not for long.
A recent report from EY estimates BTR in Australia will produce 175,000 new homes over the next 10 years.
The potential for investors – and the promises for tenants of a new and improved way of renting – has sparked a lot of excitement.
BTR has the potential to dramatically boost housing supply, thus aiding affordability, but also to provide a more secure and stable lease that reduces the need to move as often and fosters a closer sense of community.
Plus, those active in the space now are creating complexes with a raft of high-end features, from five-star communal spaces to luxury resident services.
Some will cater to multi-family living situations, with larger and unfurnished properties on offer, while others will target co-living and flatmate scenarios, or singles and couples, both young and old.
One-third of Aussies are now renting – and research shows younger people especially are renting for longer, not just because of property prices but due to changing lifestyle needs and wants.
But instability in rental markets, driven by fluctuations in private rental investor activity, means many tenants are forced to move often and face price hikes.
While still emerging, BTR offerings in the market currently have been inundated with interested tenants because of their point of difference.
LIV by Mirvac is a major operator in the BTR, with several projects in planning or development across Melbourne, including at the iconic Queen Victoria Markets.
Its flagship complex, LIV Indigo at Sydney Olympic Park, has been a roaring success, with a 96% occupancy and more than 10,000 enquiries since launch.
Angela Buckley, general manager of Mirvac’s BTR program, said the LIV model was geared towards long-term tenants by being pet friendly, offering secure leases, not requiring a bond, and allowing residents to personalise their homes by painting or hanging up pictures.
“The opportunity in front of us is not to improve the existing rental system, but to create a whole new system altogether,” Ms Buckley told a recent Property Council function of the scheme.
“It’s one that is far greater than providing better renting the real opportunity is to play an active role in helping everyday Australians live better.”
LIV complexes have a range of communal facilities for residents, from media rooms and bike workshops to co-working spaces, storage facilities, children’s play areas and shared entertaining areas.
The likely end owners of the developments contribute significantly to lease security and stability, allowing for long-term renting.
Rather than a landlord who’s likely to be a mum-and-dad investor, and who may buy and sell out of investments over a relatively short period of time, BTR assets will mostly be held by institutional and major corporate investors.
In some cases, that’s likely to be Australian superannuation funds and overseas pension funds.
BTR operator Assemble Communities, which has a particular focus on affordable housing, has partnered with Australian Super, with the fund taking a 25% stake.
Assemble has a pipeline of 4000 dwellings across inner-Melbourne and has already delivered projects in Clifton Hill and Kensington.
A report from Savills Australia released in February noted that residential rental vacancy rates nationally have fallen or remained extremely low over the past year, while rents, on average, are rising.
“Data indicates that nearly 70% of all [local government areas in Australia] had less apartments available for rent in [the final three months of] 2021 compared to two years prior, and are now in need of new rental supply,” the report found.
“This undersupply of accommodation is fuelling current rental growth to levels far in excess of historic growth.”
The latest fluctuations in private rental markets, dominated by mum-and-dad investors, is partly to blame, it said.
“A growing number of landlords [have exited] the market, taking advantage of pent-up buyer demand and aggressive capital growth.”