Build-to-Rent market in Australia: challenges and opportunities

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While premium BTR assets thrive due to high rental demand and low vacancy rates, the overall investment landscape is challenging.

Market Performance and Investment Challenges

The market’s performance is mixed. While premium BTR assets thrive due to high rental demand and low vacancy rates, the overall investment landscape is challenging. The sharp rise in land and construction costs, coupled with political and economic uncertainties, has made securing capital difficult. BTR investments require tax reforms, streamlined planning pathways, and a stable policy environment to become more attractive.

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If we can get this right, the sector could contribute between 10-15 per cent of the new housing supply we need.

Current State and Future Prospects

Australia’s BTR sector is still embryonic, with significant potential for growth. However, achieving this potential requires addressing the current policy uncertainties and complexities, construction delivery difficulties, and encouraging stability in the funding environment. If we can get this right, the sector could contribute between 10-15 per cent of the new housing supply we need.

Action Required

To realise the full potential of BTR, Urbis recommends several key actions, including:

• Tax Reforms: MIT 15 per cent tax rate obligation to deliver on complex requirements for eligibility, adjust GST treatment, and streamline stamp duty surcharges.
• Consistent Planning Pathways: Develop more nationally consistent design concessions for BTR and introduce further planning policy incentives to reduce project risks and attract investment.