By Morgan Collens

Build-to-rent, also known as multi-family housing, presents a relatively novel approach to urban housing development. In this model, developer ownership is retained throughout the entire process of designing and constructing apartment complexes. Subsequently, the developer assumes responsibility for leasing, management, and upkeep of the complex.

Such developments often receive support from institutional investors, such as superannuation funds. This differs from the conventional ‘build to own’ model, where property developers typically build apartment complexes and subsequently sell individual units to individuals who may choose to reside in them or utilize them as investment properties.

Potential Benefits:

Build-to-rent developments offer several advantages to those who choose this method of home leasing, including:

  1. Flexible Lease Arrangements:
    • Typically provide unique lease terms compared to traditional rentals.
    • May encompass extended lease periods with varying renewal conditions, minimal or no security deposits, and the freedom to personalize apartments.
  2. Unit Swapping within the Complex:
    • On-site management usually falls under the developer’s purview, affording tenants increased flexibility in adjusting their living spaces to suit changing needs.
    • Residents can relocate within the building, whether upsizing for growing families or downsizing to co-working spaces when a home office is sufficient.
  3. Abundance of Amenities:
    • Buildings often feature a wide range of amenities not commonly found in other complexes, including swimming pools, communal outdoor spaces, BBQ areas, gyms, yoga studios, shared workspaces, community gardens, and on-site cinemas.
    • Cleaning and maintenance services may be part of the package.
  4. Affordable Housing Options:
    • Certain build-to-rent projects are obligated to include affordable housing units for individuals who may otherwise struggle to afford housing.

Potential Downsides:

Despite these wonderful benefits, there are also some important downsides that need to be considered:

  1. Affordability:
    • Not all build-to-rent developments may continue to offer affordable housing, depending on the growth of the industry.
    • Overseas, such developments often come with higher average costs compared to traditional rentals, albeit with added amenities.
    • Whether this trend holds true in Australia remains to be seen, given the sector’s early stages.
  2. Homeownership vs. Renting:
    • Rising house prices and difficulties in gaining a foothold in the property market have led to a belief among nearly two-thirds of Australians that homeownership is no longer attainable for young people.
    • While build-to-rent developments provide stability in terms of leases and tenure, the actual homes’ ownership remains with developers and investors, making homeownership aspirations challenging for many.
  3. Regulation Needs:
    • Traditional apartment complex developments typically involve a body corporate responsible for site-related decisions, ranging from exterior improvements to addressing tenant or visitor complaints.
    • In contrast, the build-to-rent model may lack such a committee due to a single owner.
    • Overseas experiences with ‘large corporate landlords’ (LCL) owning rent-to-buy complexes have raised concerns regarding rent hikes and evictions.
    • The Australian Housing and Urban Research Institute (AHURI) highlights the need for adequate regulation in the Australian context to ensure that tenants can fully enjoy the promised benefits and a superior housing experience.

Are you looking into build to rent contracts? Contact Nevile & Co. today to discuss a contract review!


Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.