Build-to-rent developments explained

Treasurer Cameron Dick has announced tax concessions for build-to-rent apartment investors. But what are these projects and what could it mean? Here, your questions are answered.

Queensland Treasurer, Cameron Dick, during Question time at Queensland Parliament in Brisbane. Picture: NCA NewsWire / Glenn Campbell

Treasurer Cameron Dick has announced tax concessions for build-to-rent apartment investors. But what are these projects and what could it mean?

What are build-to-rent developments?

Build-to-rent developments are apartment buildings that are purpose-built and managed as rental properties, with units rented out to tenants rather than being sold as individual properties.

In Queensland, build-to-rent developments are becoming increasingly popular amid the increasing demand for rental properties.

Who is involved in these developments?

The projects are typically owned by large institutional investors, like superannuation funds (including ones based overseas), then run by property managers.

A Property Council report from February this year noted “the biggest barrier” for build-to-rent “remains the treatment of foreign investment in BTR under Australia’s Managed Investment Trust regime”.

“Foreign institutional investors consider BTR as a core investment (that is, a long-term passive investment seeking stable rental yields) akin to commercial, retail and industrial assets,” the report noted.

What are the benefits of build-to-rent?

Unlike traditional rental properties, build-to-rent developments tend to offer longer leases, with the option to renew for several years at a time according to

This makes things more predictable in general for renters.

Some build-to-rent developments may offer a range of amenities, such as gyms, pools, and co-working spaces, which are included in the rent.

As build-to-rent developments are owned and managed by large institutional investors, they are typically more stable and reliable than traditional rental properties, which may be subject to the whims of individual landlords.

What’s the state of the build-to-rent industry in Queensland?

The state government has approved three Brisbane-based projects including at 210 Brunswick St, Fortitude Valley (Frasers Property), 60 Skyring Terrace, Newstead (Mirvac), and 50 Quay St, Brisbane (Cedar Pacific).

Altogether these projects equate to 1200 new dwellings.

What are the new tax concessions?

Treasurer Cameron Dick announced on Tuesday that investors of build-to-rent would receive tax concessions. These are:

-50 per cent discount on land tax payable for up to 20 years

-A full exemption on the 2 per cent foreign investor land tax surcharge for up to 20 years.

-A full exemption from the additional foreign acquirer duty for the future transfer of a build-to-rent site.

The concessions will kick in on July 1, 2023. It will need to be passed through legislation.

How will this help?

It’s understood the state government hopes the tax concessions will help spur more build-to-rent dwellings, with estimate an added 3000 of these units will come online in the next four years through the policy.

How much will it cost taxpayers in forgone revenue?

According to the state government the concessions equate only to about $100m in forgone revenue over 20 years.