- Current rental laws not conducive to long term renting
- Build to rent booming on the east coast
- Aware Super one of the super funds to invest in BTR
Whilst some rental laws remain in a state of flux as moratoriums on evictions and any number of COVID related measures come to a close this year, a number of developments have burst out of the gate.
Melbourne saw Mirvac take over a large, prominent block in Melbourne, opposite South Wharf and Crown Melbourne, Sydney Olympic Park and Miranda (NSW) also welcomed new blocks of BTR too.
More recently, Brisbane will become home to a BTR tower on 210 Brunswick Street, but is still subject to approvals; the property is being developed by Frasers.
New South Wales isn’t the only state to try and sweeten the deal for BTR developers, Victoria also revealed tax breaks for the format, Westpac’s Elizabeth Fry said in a report, it was a “bid to make the sector more attractive to institutional investors and super funds looking to diversify their portfolios and get exposure to low-risk, stable income.”
Ms Fry also said Aware Super was investing in the BTR format, with a 102 unit building in Miranda, almost an hour south of Sydney.
Whether it’s really stable or not could depend on a number of factors.
Britannia Rules the BTR Waves
Allens Linklaters and Ms Fry both noted the booming nature of BTR in the United States of American and United Kingdom. Overseas, the format has quickly become a multi-trillion dollar asset class, with public policy a key feature in ensuring the success of BTR.
In the UK, fund through was a model which provided an alternative to bank finance, and what Allen Linklaters says is a lower yield, lower risk investment. A menu of options may also make investment more attractive, the law firm stating in a report that it would “provide a degree of headway”, and be “a little more relaxed than the drawdown covenants”.
Leaving the more obvious factors such as flexibility and suitable scale aside, an important factor to draw from the UK is the idea of home.
As previously mentioned, in 2018 academics called for the renewal of rental laws to be more conscious of what it meant to call a place home. There were minor issues like whether a nail could go into a wall to hang a picture, through to other more major changes to a house, and who was responsible for what.
In the Allens Linklater report that drew from the United Kingdom’s example, it states much the same, noting there had to be a balance between landlord and tenant rights.
While it has only been recognised and is yet to be fully implemented, it was noted some BTR developers were offering incentives that could lead the way in what legislation might look like.
Rental terms could reach up to three years, and other offerings like no security deposits, something an Aussie lessor might call luxuriant. Other flexibilities afforded by developers included the ability to redecorate, free upgrades on amenities such as higher speed internet, and other “first-class services” to keep good tenants.
This is article does not contain legal advice nor does it purport to represent legal advice. Any mentions about law and changes to the law are general only. For details, please seek your own, independent, professional legal advice.