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With build-to-rent (BTR) billed as a potential remedy to Australia’s housing crisis, how will the model’s uptake impact the private investor sector?
It’s no secret Australia has a severe shortfall of housing. The Albanese government knows it — they’ve committed to building 30,000 social houses over the next few years — and people hunting for a place to live know it. National vacancy rates are tracking at below 1 per cent, and in some places, such as Nerang in Queensland, they are as low as 0.2 per cent.
There have been several initiatives introduced in order to address the crisis. The Western Australian government has green-lit a Perth-based BTR project and proposed incentives for similar schemes, while plenty of activity in the space has occurred elsewhere in the country including Victoria. All of which has culminated in over $3.5 billion raised and committed to the sector since the beginning of 2021.
Speaking at the recent MRI Ascend conference, Chris Wiese, chief financial officer at Rental Management Australia, explained that the positive consequences of the BTR movement are wide-ranging, testifying that, while the obvious beneficiaries are tenants, the private real estate market will also reap rewards from the system.
He outlined how the current market undersupply is not just plaguing tenants struggling to find a rental in a market with sub-1 per cent vacancy rates, but also the businesses and property managers who operate in such a strenuous and stressful environment.
“It just puts a lot of pressure, not only on landlords and tenants, but businesses as well,” he professed. “We look at our property managers who are turning away tenants every day because they can’t fit them into our vacancies. That puts a lot of pressure on people, that puts a lot of pressure on businesses.
“Built-to-rent is part of the equation in improving the supply dynamic in the market.”
The increased prevalence of BTR projects, in the eyes of Mr Wiese, will see a shift towards a more tenant-centric focus from landlords, especially considering the calibre of property delivered as part of the BTR model, and the subsequent heightened tenant expectations.
“The other thing that BTR is going to do to private landlords is it is going to increase the focus on the tenants even more. You see these customer centric models that people put out. It’s really changing the dynamic to focus more on the tenant and the experience of the tenant within the rental market,” he said.
“Traditionally there have been some good landlords, who focus a lot on the tenant — the good ones who looked after their property correctly, they don’t hike the rent on tenants as much as they can. But, then you’ve got the other landlords who run their house like a smelly rag.”
He expressed how this shift away from the latter to the former will be “better for everyone.”
“Hopefully BTR turns that focus,” he added.
The belief in the beneficial outcomes of BTR outlined by Mr Wiese was also shared by John Minns, NSW Property Services Commissioner, who noted that with current dynamics “pitting owners against tenants across Australia on a regular basis”, what is needed are “models that actually work with government [and are] prepared to support investors of all types.”
Mr Minns touched on how the technology and innovation that have evolved as a result of the increased uptake of BTR projects present a huge opportunity for growth and learning from all industry stakeholders.
He concluded that “if we can transform that tenant experience, then we can actually get back to having a strong private investment market.”
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