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Townsville pushes build-to-rent scheme in bid to address rental crisis Townsville pushes build-to-rent scheme in bid to address rental crisis
(about 9 hours later)
Experts say there’s little evidence that a privately-owned single landlord development would increase housing affordabilityExperts say there’s little evidence that a privately-owned single landlord development would increase housing affordability
Local authorities in Townsville are seeking $40m in government funding to support a 1,000 unit build-to-rent scheme that the local council says could help tackle the rental crisis in the northern Queensland city, where the number of homes available for rent for less than $400 a week has halved in the past three years.Local authorities in Townsville are seeking $40m in government funding to support a 1,000 unit build-to-rent scheme that the local council says could help tackle the rental crisis in the northern Queensland city, where the number of homes available for rent for less than $400 a week has halved in the past three years.
However, critics say there is little evidence to suggest this method, which sees developers act as landlords and let directly to tenants, will increase affordability.However, critics say there is little evidence to suggest this method, which sees developers act as landlords and let directly to tenants, will increase affordability.
The Townsville mayor, Jenny Hill, said build-to-rent projects were well suited to regional areas where insurance costs, particularly in subdivided plots, were often much higher due to the risks of natural disasters. If there’s a single owner, the insurance rates are lower.The Townsville mayor, Jenny Hill, said build-to-rent projects were well suited to regional areas where insurance costs, particularly in subdivided plots, were often much higher due to the risks of natural disasters. If there’s a single owner, the insurance rates are lower.
“Theres also a big difference in the cost of building materials,” she said. “So we can pay 25% more for building materials [in north Queensland] than in Brisbane.“Theres also a big difference in the cost of building materials,” she said. “So we can pay 25% more for building materials [in north Queensland] than in Brisbane.
“It can often be cheaper to buy than rent in Townsville so we need new solutions for those not ready yet.”“It can often be cheaper to buy than rent in Townsville so we need new solutions for those not ready yet.”
If approved, the project will be among the first build-to-rent schemes in regional Queensland. It is being pushed by economic development body Townsville Enterprise which said it was an “ideal test case” for the model, but would require $40m from the state government.If approved, the project will be among the first build-to-rent schemes in regional Queensland. It is being pushed by economic development body Townsville Enterprise which said it was an “ideal test case” for the model, but would require $40m from the state government.
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“The build-to-rent model is largely driven in capital cities,” the company’s CEO, Claudia Brumme-Smith, said. “What we want to see is government support to get projects off the ground in regional areas.”“The build-to-rent model is largely driven in capital cities,” the company’s CEO, Claudia Brumme-Smith, said. “What we want to see is government support to get projects off the ground in regional areas.”
The plans come after the Queensland premier, Anastasia Palaszczuk, announced a range of tax concessions for build-to-rent developments.The plans come after the Queensland premier, Anastasia Palaszczuk, announced a range of tax concessions for build-to-rent developments.
But not everyone is as convinced. The tenants’ union of New South Wales CEO, Leo Patterson Ross, said the schemes had so far been rented above the market average and would ultimately do little to increase affordability without the appropriate regulation.But not everyone is as convinced. The tenants’ union of New South Wales CEO, Leo Patterson Ross, said the schemes had so far been rented above the market average and would ultimately do little to increase affordability without the appropriate regulation.
“The proven method to deliver this increase is a large publicly funded building program to deliver genuinely affordable homes,” he said.“The proven method to deliver this increase is a large publicly funded building program to deliver genuinely affordable homes,” he said.
Ross said many companies that claimed to offer “long term” stability in fact continued to offer regular 12-month contracts to ensure “maximum rent increases”.Ross said many companies that claimed to offer “long term” stability in fact continued to offer regular 12-month contracts to ensure “maximum rent increases”.
“This is not surprising from profit-driven companies in an unregulated sector,” he said.“This is not surprising from profit-driven companies in an unregulated sector,” he said.
Dr Michael Fotheringham from the Australian Housing and Urban Research Institute said build-to-rent schemes would only improve affordability if the government incentivised them to do so.Dr Michael Fotheringham from the Australian Housing and Urban Research Institute said build-to-rent schemes would only improve affordability if the government incentivised them to do so.
“There was a period in which build-to-rent was seen as a solution for affordable housing, without [governments] providing any subsidy and so that didn’t happen,” he said. “In fact units came in at a premium instead.“There was a period in which build-to-rent was seen as a solution for affordable housing, without [governments] providing any subsidy and so that didn’t happen,” he said. “In fact units came in at a premium instead.
“If you want subsidised housing, you have to provide a subsidy.”“If you want subsidised housing, you have to provide a subsidy.”
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Both Queensland and NSW have introduced land tax concessions for build-to-rent schemes in the past two years.Both Queensland and NSW have introduced land tax concessions for build-to-rent schemes in the past two years.
In Queensland, they include 50% off land taxes for 20 years and exemptions from foreign investor land taxes for developments where at least 10% of units are designated as “affordable” meaning they are let at 20% below the market value.In Queensland, they include 50% off land taxes for 20 years and exemptions from foreign investor land taxes for developments where at least 10% of units are designated as “affordable” meaning they are let at 20% below the market value.
NSW brought in land tax concessions for build-to-rent in 2021, which the premier, Chris Minns, has promised to expand, particularly in rural and regional areas.NSW brought in land tax concessions for build-to-rent in 2021, which the premier, Chris Minns, has promised to expand, particularly in rural and regional areas.
Labor announced a $30m pilot scheme on the south coast, where acute rental shortages have forced locals to raise funds to build their own community housing.Labor announced a $30m pilot scheme on the south coast, where acute rental shortages have forced locals to raise funds to build their own community housing.
A spokesperson from property data firm CoreLogic said investors were moving away from investing in rental properties, making build-to-rent schemes a more attractive option, especially as the median rental price in regional Australia reached $507.A spokesperson from property data firm CoreLogic said investors were moving away from investing in rental properties, making build-to-rent schemes a more attractive option, especially as the median rental price in regional Australia reached $507.
Fotheringham also said Australia should learn the lessons of other countries where build-to-rent schemes are more common, and ensure projects are designed with affordability and liveability in mind.Fotheringham also said Australia should learn the lessons of other countries where build-to-rent schemes are more common, and ensure projects are designed with affordability and liveability in mind.
“There’s an example in the UK of a building that has a swimming pool with a glass bottom,” he said, referring to the 25-metre long ‘sky pool’ at Embassy Gardens in London, which only the building’s richest residents have access to. “There’s an example in the UK of a building that has a swimming pool with a glass bottom,” he said, referring to the 25-metre long “sky pool” at Embassy Gardens in London, which only the building’s richest residents have access to.
“Directly below that pool are the social tenants who are not allowed to use it,” he added. “You definitely should not have to enter from behind the dumpsters if you are in the affordable part of a development, it should be relatively equitable.”“Directly below that pool are the social tenants who are not allowed to use it,” he added. “You definitely should not have to enter from behind the dumpsters if you are in the affordable part of a development, it should be relatively equitable.”
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