The Build-to-Rent (BTR) sector is continuing to gain momentum within Australia and is heralded as one of the mid to long term solutions for the country’s housing crisis’.
This model is prevalent in the UK and has been for the past decade, particularly in areas such as London, Brighton, Manchester, Leeds and Glasgow.
To understand how this model has remained so successful, I recently travelled to the United Kingdom on an explorative trip to meet with industry experts to dissect the ins and outs.
This trip coincided with the Australian Government’s 2023-24 budget, which for the BTR sector, had a number of positive incentives including Managed Investment Trust (MIT) Withholding Tax being reduced from 30 per cent to 15 percent, plus further incentives to address housing shortage issues by boosting the development pipeline from 2026-27.
In the UK, BTR is responsible for housing an incredibly large number of people. The most successful schemes are ones that integrated the BTR community with the wider social fabric, which in part is understanding the diverse types of demographics that go into creating a community.
These projects utilise the wider neighbourhood, allowing the community to participate in the overall success of these BTR projects with shared amenity spaces, creating a “village like” feel, that is often lost in traditional multi-res developments.
In the most successful examples we found that the feeling of community is what encouraged residents to extend their leases, and thus allowed the residents to grow bonds with their neighbours and local businesses.
Key learnings from the trip are that the success of the BTR model is defined by the overarching objectives of the developer, who retain ownership of the building for 30-plus years, placing a greater emphasis on longevity and adaptability of common spaces and forecasting future trends in vertical living.
Essentially the most intuitively designed projects, ones that prioritise resident wellness and lifestyle quality, are the projects that are excelling in the UK.
This goes hand in hand with more sustainable practices, which in turn can minimise outgoings and running costs. At i2C, we believe we have a responsibility to assist developers in meeting ESG targets, with some BTR investors now putting sustainability credentials at the forefront of their decision-making process.
The number of BTR properties in Australia is set to reach 16,000 by 2027, which is a significant indicator of the changing mentality around property ownership. As inflation and cost of living continues to chip away at the ability of regular Australians to become home-owners, BTR challenges the traditional notion of buying your own home and setting down roots. It’s a model which eradicates the expense of home ownership and mortgages, but still offers the possibility of community which resonates so well with Australians.
Another aspect of BTR that has allowed for the unmitigated success in the UK and in the United States, is the ease with which tenants can move between apartments. This ability to upsize or downsize as your life requirements evolve are regarded as key benefits that resonate with leaseholders, encouraging long-term tenancies and tenant security.
With the BTR model of living now firmly in the spotlight, and earmarked as part of the solution to Australia’s housing crisis, now is the perfect time to examine the best practice for introducing the model into areas set to receive new BTR projects.
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The key element that will define BTR’s success in Melbourne is the opportunity for well-considered, fully integrated vertical living and the rise of the “20-minute neighbourhood” and how they are integrated in the prospering outer-suburban growth corridors that support Melbourne’s growing satellite cities like Ringwood, Frankston, Geelong, Box Hill, etc.
There are similar motives across all the major cities of Australia, focusing on providing high density living opportunities in the respective growth pockets spearheaded by the next generation of BTR projects.
The UK BTR trip was undertaken as a corporate exchange with i2C Architects partner firm, Ryder Architecture. The collaborative effort has become known as Ryder Alliance, and now encompasses a network of 12 partner firms with over 1300 people in 26 cities.
