Once Sherrie Rossiter’s 15-year-old dog became too old to walk up the stairs, she knew she needed to start looking for an apartment. Almost three years ago, the public servant, her mother and Pomeranian-cross Xena (named for the warrior princess) moved from the townhouse they were renting into Canopy Collective, a build-to-rent development that had been recently finished in Phillip.
“We fell in love with the concept,” Ms Rossiter said.
“They’re trying to build this community vibe from the get-go.”
Build-to-rent apartment buildings are owned by a single owner, often the developer or an institutional investor, rather than being sold to individuals.
The set-up circumvents the need for an owners corporation or strata management company. The amenities are instead professionally managed by the owner, who has a stake in their maintenance.
For Ms Rossiter, this perk comes in the form of a “business centre” on the ground floor of the building, where she can work from home whenever she likes.
As for Xena, Ms Rossiter said the community was one of the most pet-friendly environments she had lived in. The building even ran a group for pet owners and their animals to socialise.
She would like to see more build-to-rent developments in Canberra, where she said public servants in particular would be able to take advantage of the rental security, or be able to leave if they were posted elsewhere without worrying about trying to get out of a traditional lease.
“It’s an amazing concept, having that security and not having to worry about 12 months down the line, where you’re going to live, having to move all the time,” she said.
“We’ve rented for a couple of years, and you don’t always have that security. An owner can pull the property out from beneath you, they can sell it, they can do what they want with it.”
Build-to-rent could help rental crisis
The additional amenities usually come with higher rent. According to the property advisory firm Charter Keck Cramer, build-to-rent apartments can cost between 5 and 15 per cent more than traditional rentals. However, the scheme has only taken off within the past 10 years in Australia, and national executive director Richard Temlett said it was likely the second generation would be more affordable.
“What we’ve seen overseas is that there’s been an emergence of mid-market or affordable build-to-rent,” Mr Temlett said.
While he said it was unlikely to ever be as cheap as a traditional rental, it would attract those who could afford it, opening up spaces for those who needed affordable housing. “We have a major housing crisis, and there’s a huge shortage of rental accommodation,” he said.
“Built-to-rent can play a role.”
Both the territory and federal governments have introduced incentives to encourage build-to-rent developments, but it has been slow to take off in Canberra.
Only 500 of the country’s 19,000 build-to-rent apartments are in the ACT.
A pipeline of apartments over the next few years is under way, but the ACT is falling behind other Australian jurisdictions, Mr Temlett said.
Over the next 18 months, 11,000 new build-to-rent apartments will be completed in Victoria, 2100 in Queensland and 1700 in NSW.
Over the same period, just 400 are expected to open in the ACT.
Mr Temlett said the ACT’s transient, white-collar population was ideal build-to-rent tenants, because they were not looking to buy, and were able to afford the higher end of the market.
However, most institutional investment in build-to-rent came from overseas, where the scheme has been popular for decades, Mr Temlett said, and the ACT’s relatively small size, rent increase laws and leasehold systems were off-putting to investors unfamiliar with how they function.
Current incentives needed to go further to encourage investors into the ACT market, Mr Temlett said.
It always comes down to basically the mathematical decision or the financial decision, which is what’s the return that they can get for the risk that they’re taking,” he said.
“Property development and property investment is risky, so it needs a certain return. The way to get those returns is to basically lower taxes and charges.
“There’s an opportunity for the territory government to actually lead the way and say, ‘look, we’re open for business, come in and we would like you to be invested’.”