Mike Zorbas: Build-to-rent projects can ease Victoria’s housing crisis
MELBOURNE is growing faster than any other Australian city, and there is a way to reduce rental costs, improve building efficiency and give people the choice of a secure rental home for longer, writes Mike Zorbas.
Opinion
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VICTORIA is growing, and fast — by 12,000 people a month. That’s 35,000 more people a year than NSW. And Melbourne is growing faster than any other Australian city.
While it’s nice that Victoria is Australia’s favourite state, and home to our most desirable capital city, we need to get growth right.
We need new infrastructure connecting our towns and cities and a greater range of housing choices at lower price points.
Victoria also needs a fairer share of federal tax dollars and additional performance-based resourcing for state agencies and councils to improve planning, roads and public transport, design and quality of life, especially in new developments.
On the voluntary side, we need to see more use of the Green Building Council’s Green Star — Communities rating to improve liveability. Planning, too, deserves a discussion in itself.
But now we need ideas to create more affordable housing for new arrivals and those who can’t afford a mortgage. Housing choice is most necessary in greater Melbourne, where nine in 10 arrivals choose to settle.
House prices in Melbourne have increased by 50 per cent since 2012, according to the Grattan Institute. So an increasing number of Victorians will rent.
Some will rent for life, and many will switch from between buying and renting. We need to increase the range of choices.
Research by PwC revealed that one in three Australians is in the rental market. For these people, rental affordability, quality of accommodation, a sense of community and the length of residency were key concerns.
The way to reduce rental costs, improve building efficiency and give people the choice of a secure rental home for longer?
Hello, “build-to-rent”.
As the Herald Sun has reported, build-to-rent, or BTR, is a solution that has worked in the United Kingdom and the United States, where hundreds of thousands of BTR homes are built each year.
Some of Australia’s major developers, such as Lendlease, are BTR sector leaders overseas.
Here, Mirvac, Stockland and Grocon are also primed to enter the market.
Think scores of apartments. BTR provides better homes more cheaply, and with a greater security of rental tenure.
How? A superannuation, property or investment fund builds a large number of apartments. Rather than selling, the fund offers long-term leases to families who can personalise their own homes.
Funds that invest in build-to-rent also have an incentive to further improve maintenance and energy efficiency ahead of the market because they are present over the lifetime of the communities they create.
Kick-starting the build-to-rent sector in Victoria will require government leadership, using the same type of fiscal and planning improvements implemented in the US and the UK.
In Australia, many of these policy levers, beyond our national- managed investment regimen and GST credits, are individual state government responsibilities.
These include density, planning efficiency, and land tax caps for BTR projects.
The NSW government has found 50 per cent of renters in Australia move home every two years, more than in any other advanced economy.
The need for greater diversity of affordable housing options has the NSW and Queensland premiers and treasurers looking at BTR. Helpfully, so is the Victorian government.
Hundreds of millions of dollars of investment is waiting for a build-to-rent platform in Victoria.
Much of this money will come from global pension funds and local superannuation funds seeking a stable long-term income stream in the Australian market.
With the right policy mix, Victoria can take pole position
on greater housing choice and a more secure and affordable rental market.
Build-to-rent is a no-brainer for Victoria, and now the race is on.
Mike Zorbas is interim Executive Director of the Property Council in Victoria
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