A new opening for renters

The state government has shown its support for the emergence of the build-to-rent (BTR) market by approving a 60-storey apartment tower at 260 City Rd, Southbank.

Developer Grocon has obtained approval for Victoria’s first ever purpose-built BTR development, which will comprise 400 apartments offered entirely to the rental market.

While the Southbank development targets the higher end of the rental market, its approval is encouraging news for housing affordability in Victoria with hopes that it will be the first of many more to come.

Grocon head of residential Christian Grahame said the approval was a great start that would ultimately lead to an increased supply of quality housing and more choice for Victorians.

“We support the introduction of build-to-rent in Victoria and believe it will be a thriving sector in the future, providing housing, community creation, investment and employment for our growing state,” he said.

“Grocon is poised to embrace the opportunities in this emerging sector and we look forward to working with government to get it off the ground.”

The BTR model, which focuses on building properties to rent instead of selling them to individual buyers, can provide high quality and well-maintained rental stock to Victorian renters.

As an emerging sector, the property industry has identified a number of barriers to bringing BTR to the general market, which Planning Minister Richard Wynne said his government would be acting on.

These include facilitating planning assessment, establishing an industry working group, financially supporting BTR in community housing, clarifying taxation arrangements and making the case for BTR to the federal government.

However, many of the barriers facing BTR sit with the Commonwealth.

“New ideas often take a while to navigate the planning system. These actions will ensure that BTR can prosper and increase the stock of rental housing to meet the current record demand,” Mr Wynne said.

BTR advocate, housing expert and former general manager of Frasers Property Australia, Robert Pradolin, welcomed the state government’s support as encouraging news but said more needed to be done at a national level to make BTR more accessible.

“I think it’s (BTR) starting to hit the road but we need to identify that this development (260 City Rd) is targeting the upper end. It’s still a niche market,” he said. “It’s the general market where we need to make it more affordable for those who can’t afford it.”

“It’s encouraging that people are prepared to invest in a new product but we need it to be a permanent asset class and not just transitional when the market is down.”

Mr Pradolin is part of a growing chorus of property industry members calling on the federal government to adopt a national housing strategy, with BTR being one of its key areas of focus.

He said that, in order to make housing more accessible to those who needed it, the Commonwealth needed to overhaul the current system to encourage Australian superannuation funds to invest in the domestic housing market.

“Australian super funds currently have invested several billion dollars of their members’ funds into private build-to-rents in America,” he said. “We need those funds directed back into housing Australians by allowing the super funds to achieve their required financial returns.”

“If our collective governments collaborate and provide the necessary financial incentives to make this new asset class work, Australian super funds will invest billions into this new and low-risk sector.”

“The provision of housing for all Australians not only satisfies the fundamental human need for shelter, but forms the backbone of the essential infrastructure needed for a prosperous country and economy.”