QBM lunch
QBM lunch

New housing model to shake up Queensland rental market

Build to rent is the newest housing format set to revolutionise the Australian property market in a way that should benefit both tenant and owner.

Based closely on the multi-family-housing formats of the UK, US and parts or Europe, it allows tenants long-term renting solutions in apartment-type complexes, with access to amenities and long-term neighbours.

QBM and BDO co-hosted a lunch where some of the state's experts in finance, development and planning joined forces to discuss the reality of build to rent in Queensland.

AUSTRALIAN DREAM

For many, the Great Australian Dream has become a thing of the past. As more people struggle to buy into the property market and vacant properties within inner city suburbia become harder to obtain, the build to rent format aims to provide a solution.

National Affordable Housing Consortium managing director Mike Myers says the build to rent model will provide an experience similar to home ownership - but without the associated price tag.

"The difference that build to rent can make is to give (tenants) a near enough experience of owning a house," Myers says.

"Long-term security, the ability to decorate your own home, the ability to have pets.

"It provides the type of environment where neighbours aren't moving in and out every six months, so you can build that kind of connectivity where organic communities develop, rather than a block of units where people are moving in and out all the time."

Although around 70 per cent of Millennials want to buy a house, the reality is that the majority are realising this may not be a possibility, Myers says.

Griffith University adjunct professor George Earl says rent to buy helps to ease anxieties of not entering the property market.

"It's saying there's nothing wrong with being a long-term renter and you're not a second-class citizen," he says. "You may well choose to rent for the whole of your housing career, and that's okay.

BDO partner Hung Tran says build to rent is a class asset at the start of it journey in Australia.

"It is driven on providing great stable and consistent returns to investors whilst aiming to provide a level of accommodation to tenants that are focused on service," he says.

 

Attendees at the QBM and BDO Boardroom Lunch in Brisbane from left: Scott Ponton, Jessica Carmichael, Chris Catanzaro, Ryan Andersen, Eduardo Roca, Hung Tran, Mike Myers, Adam Hirst, George Earl, Peter Anderson, Sophie Lam and Elise Williams. Picture: Liam Kidston.
Attendees at the QBM and BDO Boardroom Lunch in Brisbane from left: Scott Ponton, Jessica Carmichael, Chris Catanzaro, Ryan Andersen, Eduardo Roca, Hung Tran, Mike Myers, Adam Hirst, George Earl, Peter Anderson, Sophie Lam and Elise Williams. Picture: Liam Kidston.

WHAT IT MEANS FOR THE BUYER

It's that stability that makes build to rent useful for tenants, but also future investors, experts say.

Build to rent specialist Arklife managing director Scott Ponton says the build to rent model of property will provide a significant boost for the investors, as well as the overall economy.

"Build to rent is a huge income play," he says.

"The stable income, the performance of that income and the stability of the tenancy is quite strong.

"If done right, it will be very successful."

The UK has proven the possibility for success, with an industry worth of £58 billion - the equivalent of $A108 billion - in just eight years.

According to Ponton, the great difference build to rent can make for the market, is steady tenancy. He says current vacancy rates in new inner-city apartment buildings can be anywhere from 1.5-2 per cent at any given time.

BDO partner Chris Catanzaro says the US is another good example of how build to rent works.

"It's been around about 50 years and it's around 20 per cent of the rental market. It's creating a different housing choice and different products for what people need or want," he says.

GOVERNMENT'S ROLE

Although build to rent within Queensland is gaining traction among development experts, the government landscape is yet to accommodate an achievable model.

According to Mirvac Group general manager Adam Hirst, a successful housing format will require joint government efforts.

"There's a lot of ways government can support it and there's both federal and state ways to look at it," Hirst says.

"The first big way they can support it is by showing a big appetite for the sector.

"Feedback that we got particularly from foreign capital is that it's very difficult to go into a non-existent asset class."

Hirst says for build to rent to be given a fair go within the market, it's important to give developers within the sector the same tax benefits privy to supermarkets, office buildings and industrial buildings.

He says the format is like any other institutional real estate class, and as such should be given the same income tax of 15 per cent, rather than 30 per cent for foreign investors.

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