Build-to-rent: What is it and how does it work?

Market Insights
1 year ago
2 minutes

Build-to-rent was designed to solve one specific problem – the housing crisis. It is a relatively recent model that has swept through the property industry in the last few years. 

Over 30% of Australian households are renting. This suggests that renting a property is now becoming a more affordable housing option than buying a stand-alone median-priced home.

Since renting has started to become more feasible than buying a house, build-to-rent is a new way of renting where a developer builds a development of purpose-built rental homes and then rents them out to tenants. 

Let’s dive deeper into what build-to-rent is and how it works.

What is build-to-rent?

An Australian construction site. Image source. 

Despite already becoming a popular phenomenon overseas, build-to-rent developments are appearing more and more in Australia. Build-to-rent, also referred to as multi-family housing, is a development or property model that focuses on rent rather than sale. Developments are typically owned by institutional investors and property developers. 

As such, build-to-rent can be seen as an alternative to home ownership and aimed at those who are looking for long-term rental accommodation, with additional services such as maintenance, resident welfare schemes, and community activities. Build-to-rent also offers residents a wide range of benefits including stylish living, high-quality housing, and modern amenities.

How does build-to-rent work?

Build-to-rent is a term used to describe residential developments where all units are owned by the developer and rented to tenants rather than being built to sell to buyers.

Build-to-rent properties are typically rented long-term, with leases of several years, which gives tenants more security and stability.

Depending on the development, you might be able to sign a longer lease with varied renewal conditions, pay little or no security deposit, redecorate the unit, and have a pet in the apartment without having to let the property management know.

Are build-to-rent properties affordable?

Build-to-rent schemes often offer homes for market rent. Image source. 

Affordability is subjective, so the answer can be yes or no. Buying a house in any large city is expensive. But build-to-rent schemes offer homes for market rent, making homes more affordable to rent for many. Many build-to-rent properties in desirable areas also include other essential amenities within easy reach.

However, it is often a requirement for build-to-rent properties to offer affordable units to individuals who might not otherwise be able to afford them.

Who lives in build-to-rent properties?

Build-to-rent properties provide housing for residents of all ages. These properties are primarily focused on the rental market rather than people seeking long-term home ownership. 

Although the build-to-rent scheme is relatively new in the Australian housing market, its popularity is rising. Build-to-rent properties provide a simple route to comfort, luxury, and community for those not ready to own a house. 

Click here for more news, market insights, and lifestyle insights.

Header image source