Investors and property developers are calling for Government and councils to back build-to-rent schemes to help address the housing crisis.
Build- to-rent is a new sector in housing investment that builds accommodation for the rental market. Unlike traditional renting, it typically provides more security for tenants because it doesn’t work on the capital growth model. Instead it provides longer-term tenancies with less uncertainty for tenants.
Build-to-rent schemes in the United Kingdom have proliferated since their advent as an asset class in 2013.
JLL head of research and consultancy, Paul Winstanley was an “active participant” in the sector as it emerged in the UK, and said this form of housing investment changes the relationship between tenant and landlord to one much more akin to customer and service provider.
“That change from tenant to customer is bigger than it sounds, it’s about the ethos, and it’s about building a community. It’s in the landlord’s interest that you stay as long as possible,” he said.
Rent reviews were typically made against the Consumer Price Index, a yearly adjusted measure of the cost of goods and services, under this model and only at the end of a three-year tenancy would it be reviewed against market prices.
Winstanley said it had gained popularity over time as investors became comfortable with it.
“As of January this year, there were close to 140,000 build to rent properties either completed or in the process of being built in the UK. In 2013, the asset class didn’t even exist,” he said.
The same set of dynamics that drove the explosion of build to rent in the UK, namely a shortage of housing and affordability, existed here. If the country acted quickly to introduce build to rent schemes, it could help solve the housing crisis, Winstanley said.
Since coming to New Zealand he has been “amazed” at how many investors and developers have approached him to see how something similar could work here.
Haven Funds have been doing work in the area, said director Kerry Hitchcock, and would look to have a fund together by the end of the year that would own a large-scale residential property which would give tenants a “decent experience”, sadly lacking in New Zealand.
Haven was working with the Financial Markets Authority to put a licensed operation together, he said.
Winstanley said build-to-rent was about providing a better experience for the “customer” than traditional arrangements could provide
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