Hundreds of affordable rental homes could hit the market soon, after the federal government finalised its new build-to-rent (BTR) rules for property developers.
The new rules mean overseas BTR developers and landlords can take advantage of recently passed tax cuts by providing affordable rental homes in their projects.
Speaking at the National Housing Solutions Summit in Melbourne on Tuesday, federal housing minister Clare O’Neil confirmed the new rules for its BTR tax cuts had been finalised last week.
“One of our last acts this term of parliament, in the hours before the election was called, was to sign off on the final build-to-rent regulations to give you all the confidence to start investing,” she said.
“These regulations finalised last week lock in the tax cuts, define how the 10% affordable housing will operate and cement a role for community housing providers to help manage the affordable tenancies.”
EY and Property Council modelling has shown the tax cuts could unlock 80,000 new BTR developments over the next decade.
Ms O’Neil said many of the 8,600 BTR homes operating and the 17,500 under construction were expected to take up the tax cuts in exchange for making 10% of those homes affordable.
“Taking 10% of the above pipeline – if all developers take up the tax cuts – 860 homes will be unlocked right away as affordable, with 1,750 under construction, and 8,000 new affordable rentals delivered over the decade as part of that pipeline of 80,000 homes in total,” Ms O’Neil said.
Federal housing minister Clare O’Neil confirmed the new BTR rules had been finalised. Picture: Supplied
“This is a profoundly efficient way for a Commonwealth Government to support more market housing and deliver affordable housing in a single move.”
The new rules outline the key details to implement most elements of the legislation and enable BTR operators to opt in and immediately provide affordable rental homes.
They have been welcomed by property and housing groups, including the Property Council of Australia, Community Housing Industry Association (CHIA) and National Shelter.
Property Council chief executive Mike Zorbas said the regulations will help unlock the largest federal supply of rental homes this century.
“This is a welcome investment in 80,000 secure rental homes over the next decade,” Mr Zorbas said.
“Of these, 8,000 will be affordable, with 1,200 ready to be rented in the near future.
“This is the largest ever federal effort to help relieve pressure on renters.
“We look forward to working with the government and industry colleagues on future details and supporting the important commitment to future drafting banning ‘no cause’ evictions,” he said.
These changes mean tenancies will now be offered for a minimum of five years, with affordable tenancies defined to be available to people on moderate and low incomes.
At least 20% of the affordable tenancies will be available to low-income earners where rents are capped below 74.9% of the market value or 30% of household income, whichever is lower.
The federal government hopes the new BTR tax cuts will incentivise overseas BTR developers to build more rental apartments across Australia. Picture: Getty
CHIA chief executive Wendy Hayhurst said the legislation will unlock affordable rental accommodation urgently needed by lower income workers.
“This is a critically important initiative that will provide a pipeline of genuine affordable housing for households that have few other alternatives,” said CHIA CEO, Wendy Hayhurst.
“When done correctly, BTR provides tenants the sort of stability they badly need but can’t get because private ownership is out of their reach.”
The BTR sector is an emerging sector in Australia, making up just 0.2% of the total value of the residential housing sector. For comparison, it accounts for 5.4% of the total value of the residential housing sector in the UK, and 12% in the US.
Interested in the BTR market? Check out our dedicated New Homes section.
