22 Oct 2021

Call to change Overseas Investment Act to incentivise build-to-rent homes

12:17 pm on 22 October 2021

The Property Council says 25,000 build-to-rent (BTR) homes could be brought to market in the next decade if what it calls legislative barriers to investors are removed.

House  with "For Rent" sign in front

File photo. Photo: 123rf

Build-to-rent properties are purpose-built housing designed for long-term tenants, rather than for sale.

The Council said its data indicates that more than 6000 units could be in the property market in the next two years if policy settings incentivised investment.

"Further analysis suggests this number could swell to over 25,000 new homes within a decade," it said.

Property Council chief executive Leonie Freeman said this would require better clarity on the Overseas Investment Act, which currently disincentivises large institutional investment in build-to-rent in New Zealand and defining BTR as it own asset class.

Reclassifying BTR as a commercial asset would change how depreciation was applied to the properties and would provide a genuine incentive to help unleash large-scale development, she said.

"BTR has real potential to house more New Zealanders comfortably, quickly and affordably.

"But if we want large-scale BTR to be unlocked, then the Government needs to stop blocking the path to progress and accept that this could be a simple solution to help ease Aotearoa's housing woes," she said.

BTR is one of the largest asset classes in the United States and Europe but there a few developments underway in New Zealand, according to its advocates. [ https://www.rnz.co.nz/news/business/443298/build-to-rent-momentum-growing-investors-say ]

They are typically owned by large institutional investors and are overseen by specialist managers.

A recent survey suggests there is about 853 BR units current under construction or completed across 21 sites, Freeman said.

She said BTR units was renting for the "Netflix generation" because rent was treated as any other pay-as-you-go service.

"They aren't buying the house - they're buying the living experience."

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