13 Nov BTR – New kid on the block
In a further move to create a post-Covid19 stimulus to the economy and to future proof for the anticipated surge in post-pandemic migration, governments around Australia are considering a move towards Build-to-Rent (BTR) adding further diversity to the housing options available in Australia.
BTR refers to the building of apartment blocks which are purpose built for long-term rental occupation with ownership held by a corporation or, developers and their financiers based on their receipt of a long-term investment return. BTR also offers the renter benefits through longer-term tenancies allowing them to settle with certainty into “their” home and community whilst providing an affordable housing option.
The Berejiklian government has taken the lead in this initiative by cutting land tax by 50% for new BTR projects for the next 20 years. Foreign investors may also be eligible for an exemption or refund from surcharge purchaser duty until 2040 for BTR developments. The government is also working to introduce planning policies through the Department of Planning that have the potential to fast-track approvals for future projects.
To be eligible for the land tax discount and other concessions, the project must have been started after 1 July 2020, be at least 50 units and located within metropolitan areas.
Underpinning all this activity are Australian Bureau of Statistics (ABS) projections which indicate that by 2030: –
- Australian population increases by 3.3 million
- Increase in dwelling demand of 1.3 million residences
- Increase in rented dwellings of 400.000 residences (approximately 130,000 in NSW/ACT)
Australia’s success at managing the health and economic response to pandemic is expected to greatly appeal to migrants and foreign capital investors which in part explains the governments rush to introduce BTR.
BTR is seen as supplemental to the existing housing options. It does not replace the Great Australian dream of home ownership but merely provides another pathway for some to achieve it.