Although popular around the globe, build-to-rent was a fairly unattractive housing option in Australia for several years due to its taxation obligations. However, as Labor last year announced taxation reforms for build-to-rent properties, it is now becoming an increasingly popular housing option in Australia. Below we look at build-to-rent in more detail…
What does build-to-rent mean?
Build-to-rent works similarly to the build-to-buy model except it refers to a residential building where all the units are owned by the developer and leased, rather than sold. For example, a developer or committee who builds a house and finds a tenant to rent the house would be following the build-to-rent model.
What are the benefits of build-to-rent properties?
- Larger build-to-rent properties, e.g. apartment blocks, can be hard to finance as banks are reluctant to approve loans for build-to-buy buildings without the vast majority of apartments selling first. Build-to-rent is an attractive alternative to build-to-buy properties for both body corporate and individuals, as they are more easily approved for investors and developers.
- Labor is proposing to cut withholding taxes in half on managed investment trusts, specifically benefitting build-to-rent properties.
- The build-to-rent model is particularly beneficial for property owners as it is designed to enable the owner to receive a constant rental income. This is useful for institutions that require constant, steady income, such as a superfund.
- Build-to-rent is beneficial as the housing market constantly fluctuates, renting is often the only option for young couples and young professionals making the demand for rental properties consistently high.
Development of build-to-rent
As build-to-rent is still growing in popularity across Australia, different versions of build-to-rent are being trialled and refined. For example, build-to-rent models are being used for student accommodation and rent-to-buy where tenants have the option to purchase their rental property after a few years of renting. Now, therefore, is a great time to get involved with build-to-rent projects, whilst demand is high.
Is managing a build-to-rent property difficult?
If you are concerned that a build-to-rent property would require too much building management, a building and facility management system, such as MYBOS, can put your mind at ease. MYBOS is a platform that helps simplify all areas of building management, from strata manager to resident communications. MYBOS ensures your community of tenants are happy and you are kept updated with important information. For example, tenants can report defects on the app enabling you to contact a caretaker or facility manager from anywhere in the world.
If you’d like to learn more about the MYBOS custom app, contact a member of our expert team today! Whether you are an individual landlord or a member of a owners corporation, we can make the MYBOS platform work for you.