‘Australia Playing Catch Up on Build-to-Rent’
By Kathy Jones, Chair, Engage Communicate Facilitate (ECF)
The UK housing crisis continues to fuel demand for rental units with quality, centrally located and affordable housing in scarce supply. Similar affordability crises are playing out in Australia with buy-to-sell investments plummeting and converts to renting increasing due to the high cost of buying and lifestyle changes which make renting more attractive. The housing crisis in both countries can be eased with the help of large scale investments in the Build to Rent (BtR) sector, which has the potential to meet current and future population needs if adopted with the appropriate haste required to level demand.
Definitions of what constitutes a BtR development are constantly being refined, but it is generally agreed they must consist of purpose-built residential properties (over 50 units) designed for rent and not sale. Intended for longer-term tenancies, the development is usually owned by a singular large investor who provides on-site management and often includes additional amenities to entice renters such as communal areas or in-house facilities.
The BtR sector has been permitted to flourish in the UK with numerous policy and market interventions designed to make it easier for investors to secure approvals while placating the public with long-term and affordable housing levels. These include the landmark Montague Review (2012) and the Government’s BtR consultation (2017) which provided recommendations to increase institutional investment in the private rental sector. The cumulative effect of these policy and market interventions have enabled greater buy-in from investors and BtR units are now rapidly increasing in the UK where today there are over 142,000 units completed or planned.
BtR developments often involve a reduced deposit with all utility bills and ultra-fast broadband included in the rent. Recent examples in the UK include Wembley Park, due for completion in 2021. The 85-acre development from Quintain will deliver 5,000 BtR homes and is set to be the biggest BtR development seen yet. As a result of the mammoth build, Quintain has created their own BtR business, Tipi, a ‘lifestyle focused rental company’, to manage the homes on site. Tenants are promised modern pet-friendly apartments with iconic views and shared facilities like a cinema room, communal lounges, gym and landscaped gardens, with all bills included and a friendly concierge on site 24/7.
Whilst the UK sector has yet to achieve the same level of market penetration as the United States, it is certainly more mature than the Australian market, comparably in its infancy.
ECF’s Australian partner agency KJA recently hosted Andy Leahy, a leading BtR specialist from the UK, in Australia to meet policy makers and stakeholders and discuss how to make the asset class a reality. Andy presented at a BtR roundtable event for the Committee for Sydney and met with NSW Planning and Public Spaces Minister, Rob Stokes MP and the Minister for Water, Property and Housing, Melinda Pavey MP. He also met private sector developers actively considering BtR opportunities, including Coronation Property.
Increasingly we are seeing attempts to get BtR schemes off the ground in major cities along the Australian east coast. One such example is the Coronation Property venture in Merrylands which is approved for five high-density towers comprising over 500 residential apartments and, like many new BtR developments, will constitute a mix of rent and sale properties. The precinct will boast ground level retail next door to the Merrylands Railway Station and Stocklands shopping centre, multiple common areas, pet-care services, onsite maintenance and focuses on convenience, utility and community to rejuvenate the area.
On his recent visit, Andy commented that “like London, Sydney is facing a challenge in meeting its housing need and BtR represents a new way of thinking about delivery to meet that need.” However, Australia is likely to face similar challenges as its predecessors in the UK and will need to overcome over regulation, a lack of education, and differing in regional policies which have created barriers for developers in the UK.
With sky-high house prices, home ownership decreasing and almost one third of Australians currently renting, the large-scale investment opportunities provided by the BtR sector are not being utilised to cater for demand. While property developers continue to push for legislative tax reform, ECF hopes that Australian policymakers and local authorities will more readily adopt a commonplace BtR policy position than their UK predecessors, and we will be following the developments down under very closely.
An Engage Communicate Facilitate (ECF) Insight.
ECF is an Australian-owned specialist communication and engagement consultancy working across the United Kingdom. ECF designs and delivers successful solutions for high profile and often contentious projects across the planning, construction, infrastructure and regeneration sectors. ECF draws upon the expertise of UK-based specialists and combine it with innovative engagement methodologies, drawn from Australia and around the world, to deliver best practice communications and engagement solutions for public and private sector clients. ECF also works closely with KJA, one of Australia’s leading strategic communication and engagement consultancies.