Build-to-rent development is the big winner after the Australian government passed new tax concessions, rapidly increasing the number of mid-rise and high-rise apartments built over the coming decade.
That is, according to new EY modelling, which claimed that the Management Investment Trust (MIT) withholding tax concession passed by the Albanese government last week will unlock more than 80,000 new apartments across the country’s major cities.
“Of these, 8,000 will be for affordable houses, and 1,200 will become available to rent in the near future,” according to Property Council CEO Mike Zorbias, who said the concessions, tied to five-year minimum leases, have provision for 10% affordable housing and will scrap no-cause evictions, provide renters with more security and capacity to save.
“This is the largest induction of investment in new rental homes by a federal government in recent memory,” Mr Zorbias said, adding that “Housing Minister (Clare) O’Neil has championed this rental supply.”
Speaking about the reforms, O’Neil conceded that whilst build-to-rent was not a silver bullet solution for the housing crisis, it would nonetheless add to supply:
“I’m confident that this is a really important part of the answer to our housing problems in this country, (whilst) not perfect, because nothing in life ever is, but a good step forward for us.”
Clare O’Neil, Australia’s Housing Minister on the need to rapidly expand mid-rise and high-rise build-to-rent projects nationwide.
In recent months, build-to-rent construction has emerged as a growing market for Australia’s mass timber market. Japanese timber giant Sumitomo Forestry pledging to spend $1.2 billion building timber-based build-to-rent assets in Brisbane, Sydney, and Melbourne, while MODEL—a new Australian-based developer—in September revealed plans to build 5,000 build-to-rent apartments in Melbourne out of cross-laminated timber.
Earlier this year, Wood Central revealed that residential high rises that are between 12-18 stories is the new “sweet spot” for mass timber construction, with a US study produced by PCL Construction, one of North America’s largest construction contractors, DCI Engineers, the engineers behind the world’s first post-and-plate mass timber high-rise, and design firm Weber Thompson, revealing that timber-and-steel based apartment complexes are price competitive with traditional steel-and-concrete towers.
- To learn more about the reforms to the MIT and how they can drive build-to-rent development out of the ground, click here for the Property Council of Australia’s key policy document.
