Balanced rental reform welcome; build-to-rent must be in the mix
The Property Council of Australia supports the intent of the Victorian Government’s rental reforms to be introduced to Parliament this week, but is calling for greater support for a build-to-rent asset class that will provide tenants with greater amenity and security of tenure.
Victorian Executive Director (Acting), Matthew Kandelaars said that it is important to protect good tenants who treat a property with respect.
“Good, long-term tenants are highly sought after by landlords but it is important that legislation is balanced between the rights of those tenants, and the rights of landlords to protect their homes and investments”, said Mr Kandelaars.
Along with changes to tenancy legislation, Mr Kandelaars said that changes to support a new at-scale build-to-rent asset class in Victoria are urgently needed to provide greater tenant amenity and security.
“The build-to-rent asset class has long-term tenancy at the heart of its business model. Instead of turning tenants over, build-to-rent investors would much prefer to see a tenant remain for 10 to 15 years,” said Mr Kandelaars.
The Property Council has been working with governments in Victoria and nationally to investigate this new asset class. The NSW Government has recently introduced a build-to-rent model and the Commonwealth Government has recently announced changes that are a step in the right direction.
“It’s important that the Victorian Government supports build-to-rent in Victoria in a meaningful way, to ensure Victorian renters aren’t left behind,” said Mr Kandelaars.
- Normally the property industry operates under a build-to-sell model, as holding costs for properties do not generally provide a competitive return on investment.
- Under a build-to-rent model, some Government support by way of long term leasing of state land (per the NSW model), grants or tax concessions make the returns on a long term holding comparable with other asset classes.
- Promoting build-to-rent means a developer (generally with backing from a superannuation or investment fund) can operate with a long-term view. That means you can rent the properties out at a more affordable rate, but also provide a long-term income stream to thousands of people who have superannuation.
- Longer-term rentals, with security of tenure, provide a pathway for aspiring home owners to buy into the market. Build-to-rent will provide tenants with the ability to stay in the one rental, with high amenity, for far longer; reducing the need to constantly move.
- Aside from the benefits of build-to-rent on rental affordability, it benefits housing affordability more broadly. With the option of a long-term tenancy in a property with high-amenity, some people will choose renting over buying, with the potential for downward pressure on house prices for first home buyers and others who decide to remain in the buyer’s market.
- The build-to-rent housing model can deliver greater security of tenure over extended periods, while also enabling tenants to right-size their accommodation to suit their needs. As it is a long-term investment, often by pension or superannuation funds, tenants in build-to-rent housing are better protected from the risk of landlords deciding to sell their rental properties
Media contact: Matthew Kandelaars | M 0416 443 555 | E [email protected]