Is Build To Rent The Next Big Real Estate Trend In Australia?

With over 85% of Australians living in urban areas, a lack of affordable housing is a real issue.  To alleviate shortages and provide a solid return on investment for developers, more build-to-rent projects are coming online.

Build-to-rent projects are large residential developments where all the properties are owned and managed by a single entity.  This is different from the traditional model of building an apartment and selling each unit individually.

It’s a growing segment and is gaining recognition as a viable option for those looking for long-term housing.

Renter – Pros

Build-to-rent projects typically offer longer leases.  With leases as long as 3 years, renters are not faced with negotiating a new lease every year.  The tenant knows their residency is secured for a longer period.

Developers go out of their way to develop a sense of community.  Providing shared spaces allows neighbours to mingle and get to know each other.  Many residents of these projects talk about their neighbours as their friends.

Build-to-rent projects are loaded with amenities.  You can find gymnasiums, yoga rooms, spin studios, spas and saunas, community kitchens, and co-working spaces in many of the new developments.

You get the benefits of renting a furnished apartment.  With appliances and utilities included these projects are ideal for on-the-go professionals and others with very busy schedules.

Lease arrangements tend to be more flexible.  Many have no bond requirements making moving in much simpler.  Tenants can paint and decorate their spaces to suit their own tastes.  Pets are welcome at almost all build-to-rent projects.

You can switch units as your circumstances change.  If you have a child and need more space many projects will allow you to move to another unit in the same project.

Renters are not obligated to perform common area maintenance.  If you buy a house, you have the added burden of maintaining it over the years.  This is a fact of home ownership many first-time buyers fail to appreciate

Renter – Cons

Build to rent projects typically charge more due to the premium services and amenities.

Some renters have a fear of being locked into a longer lease.  Although you can usually pay a lease breakage fee, if a renter has uncertain circumstances they might be hesitant to sign a lengthy lease.

Renters never enjoy the advantages of home ownership.  Foregoing owning a home means you will not accumulate a long-term asset that can be a benefit during retirement.

Unlike Europe and The United States, build-to-rent projects are still a relatively new concept.  Finding a good project is harder when there are fewer options to choose from.  Renters have to do more due diligence to understand their lease and all associated fees and costs.

Australia is determined to reduce the housing shortage and is working on getting a better deal for renters.

You will see more build-to-rent projects in the coming years especially since there is a rental shortage and vacancy rates are extremely low.  Renters will begin to understand that these are viable alternatives for many who enjoy the modern urban lifestyle.