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Build-to-Rent is currently being ramped up by the Minister for Planning and Public Space, Rob Stokes, as a piece of the jigsaw puzzle to solve our increasingly problematic affordability woes. The idea is that large institutional investors, or large developers, build unit blocks without strata and rent them to tenants over a long term.
The financial model is based on cashflow rather than capital gains. Some of the benefits seen include much longer lease terms for tenants, which provides stability as well as a steady supply regardless of the peaks and troughs we have seen in development over the last decades. Some of the benefits are great.
The problem here is that the Build-to-Rent model will usually have a premium on market rates of an extra 10 to 20%, meaning that once again we will see housing directed to the top 40% of income earners, leaving little extra supply for the bottom 40% of earners.
I would like to remind the Minister that Build-to-Rent has been happening for many years already; through community housing providers building affordable housing targeted at low- to middle-income earners.
It is the bottom 40% of earners who have the most difficulty in securing and maintaining affordable leases. We need policy that addresses this, especially when investment in new social housing is very low. Investing in housing that targets those who can least afford to move and for those who are already paying more than 30% of their income in rent? That’s the sort of Build-to-Rent I would love to see! For Rob Stokes’ article, see https://www.smh.com.au/national/nsw/build-to-rent-sydney-can-get-off-the-property-roller-coaster-20200821-p55o7w.html#comments