The build-to-rent model may not be the panacea that the private sector and state governments seem to think it is.
State governments are moving to reform their respective tax regimes to encourage the build-to-rent market in Australia. In lending their support, the states are priming a new asset class to sustain the real estate and institutional investment sectors under the guise of providing greater housing choice.
Build-to-rent refers to a residential development designed and financed solely for renters, with an institutional investment group, such as a super fund or the developer itself via a Real Estate Investment Trust (REIT), maintaining ownership of the development and managing the tenancies within.
The NSW government recently enacted land tax and stamp duty concessions to support build-to-rent projects. The Victorian government followed suit and announced in the 2020-21 budget a 50% land tax discount for build-to-rent projects, including an exemption from the absentee owner surcharge.
