THE property industry has welcomed the Victorian government’s decision to fast track development applications for build to rent projects and establish an industry working group.
Last week the government announced it will be 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.
Australian Property Institute chief executive Amelia Hodge said build to rent will contribute greatly to the economy through the construction sector and assist renters source affordable accommodation.
“The API applauds government in getting directly involved in this innovative housing type that will boost employment and the economy as well as helping many families currently struggling in a tight rental market,” she said.
“Build to rent is a huge sector in both the United Kingdom and the United States; its resolving some of the supply issues of affordable housing, and at the same time creating a vehicle for major investors and developers.
“Australia, like the UK and the US, has an ever increasing affordability issue in the rental market. Build to rent is the ideal vehicle to overcome many of these issues in a controlled environment with government oversight to ensure protections to renters.” Hodge added.
Property Council Victorian executive director Cressida Wall said the government’s support for build to rent is best in class and a welcome first step in creating a sector that will deliver high quality rental accommodation and provide greater security of tenure for Victorians.
“We congratulate the government on its willingness to work with industry to address these challenges.” Wall said.
The Australian Institute of Architects Victorian chapter president Amy Muir welcomed the government’s foresight in bringing build to rent to the state, a move which will help provide additional quality and affordable housing to residents into the future.
“The institute is passionate about the provision of quality and affordable housing options, which build to rent will help provide. Our members currently have projects underway that support this mission,” she added.
Planning Minister Richard Wynne said the first BTR approval in Victoria is for a 60-level apartment block on City Rd Southbank, with several further applications being assessed through the fast track process. The 60-level project at 256-266 City Rd Southbank, was acquired by Daniel Grollo’s Grocon from Altus Property in January this year for around $35 million.
Muir said the government’s commitment to fast track development applications was commendable but must come with assurances building quality would not be compromised.
“Good quality design responds to critical contemporary issues such as rising energy costs, by making homes more energy efficient and these features need to be considered for this new housing class.
“The institute would encourage government to provide incentives linked to specific design and sustainability outcomes, supported by enhanced tax revenue from development for re-investment in public benefit initiatives and infrastructure.” Muir said.
Experts said BTR needs scale to succeed, which means projects will likely need concessions to density requirements under current planning laws.
Allens’ report, Accelerating build to rent in Australia, said for BTR to succeed, its scale and capacity for financial return must be established, as well as overcoming tax challenges and finance structuring.
The report said concessions to density requirements could be offset by requiring BTR projects to deliver higher level of amenity not only for residents but for the wider community.
“The UK experience indicates that amenity is one area where there is close alignment between local authorities and build to rent developers, as build to rent developers have a strong interest in ensuring that the community in which they operate is a desirable place to live.
“In fact, the Mayor of London has recognised the potential for build to rent developers to deliver amenity uplift for the broader community in which they operate and requires that build to rent units be held for rental occupation for at least 15 years.
“If units are sold in breach of this covenant, then local authorities should be able to operate a clawback system where a set amount of the proceeds of sale is returned to the local authority to redirect into affordable housing.
“Overlaying this in Australia is the application of design standards for apartment developments, such as those which have operated in NSW for some time under SEPP 65 and the Apartment Design Guide, and those introduced in Victoria in December 2016. These standards may need to be revisited to take account of some of the unique features of the build to rent model,” Allens said.
Australian Property Journal