The property industry supports the latest pre-election commitment by the Labor Government in relation to boosting housing supply – the proposed $75 million Build to Rent Kickstart Fund and increased Build to Rent land tax concession announced today.
According to the Urban Development Institute of Australia (UDIA WA) these initiatives will help support the delivery of more apartment projects to the market, specifically those aimed at easing the rental crisis.
The new Fund will provide up to 30 per cent low-cost finance for Build to Rent projects – or up to $250,000 per apartment – in exchange for 30% of these homes being reserved for affordable private rentals.
On top of the Fund, the Build to Rent land tax concession for buildings with more than 40 apartments will be increased from 50% to 75% for projects that will commence within three years.
UDIA WA CEO Tanya Steinbeck said this was another great initiative aimed at making apartment projects, in this case specifically Build to Rent, more financially viable.
“Making apartment projects stack up financially, outside of premium locations, has been a significant issue in WA, and that has meant we are not seeing enough affordable apartment supply reach the market,” Ms Steinbeck said.
In particular, rental vacancy rates remain tight, and affordability is an issue.
“Build to Rent’ (BTR) offers an effective longer-term solution to many of our current and long-term rental challenges, however taxation settings have deterred investment in this sector,” Ms Steinbeck said.
“It is promising to see State Governments looking to further address this important issue, to bolster investment in the Build to Rent sector,” Ms Steinbeck said.
“It is great to see the government listening to practical advice from industry, in terms of what can make a real difference to the product mix that industry can deliver to the market to benefit all West Australians who are seeking an affordable roof over their head,” Ms Steinbeck said.
“The housing supply crisis remains a real and present issue for many West Australians,” Ms Steinbeck said. “Delivering more apartments, in Perth and the regions, is another step toward getting more homes available to those that need them.”
What is Build-to-Rent?
BTR is an emerging development model that is gaining traction in Australia following many successful projects around the world.
Put simply, BTR apartment projects are designed and constructed by a developer who retains ownership of the building when it’s complete. The apartments are then rented out directly to tenants by the developer, who also manages and maintains the complex.
BTR projects differ from traditional ‘build to own’ models, where a property developer might build an apartment complex and then sell the units off to individuals, who will either choose to live in them or rent them out as investment properties.
While the model can provide an effective option for affordable rental accommodation, taxation settings have been a deterrent. These changes build on previous efforts by the State and Federal Government to make the sector more financially viable, and we hope to see more of this kind of development in WA and around Australia.