Decoding The Far-reaching Benefits Of Build To Rent Scheme

Thursday, 28 October 2021, 6:21 am
Press Release: Kalkine

Summary

• The National Party has recently announced a new bill, which aims to promote investment in the build-to-rent segment of the housing market.
• Many foreign countries have embraced the build-to-rent scheme to tackle the housing supply problem, including the UK, where the arrangement was a hit.
• Build-to-rent offers a unique chance for prospective homebuyers to turn their dreams into reality.

Build-to-Rent (BTR) has been perceived as an efficient, one-off solution to New Zealand’s housing problem that has been affecting the average citizen for a long time. A popular phenomenon overseas, Build-to-Rent is a unique rental scheme under which apartment complexes are constructed specifically for the rental sector. The distinctive living arrangement has garnered fresh attention after a new bill has been declared to boost BTR arrangement in the country. The nation’s welcoming gesture towards BTR has presented it with an opportunity to harness the benefits of this rental scheme.

In a major feat for NZ housing, the National Party has recently announced the Build-to-Rent Housing Bill in order to unlock investment in purpose-built rental housing in the country. The legislation will promote investment in purpose-built rental properties that could accommodate a larger section of the homebuying population.

The New Zealand government seems to have inspiration from the UK, where the build-to-rent model fetched promising results, with the construction of around 35,000 units as of September last year. The scheme is being deemed as a new-age solution to the Gen Z and Millennial population, who no longer see much value in homeownership.

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Given this backdrop, let us discuss a few benefits that are exclusive to the build-to-rent property model:

Increased flexibility

With the build-to-rent arrangement, tenants have a chance to lock in a long-term agreement, which makes them well-positioned to afford a house. An added advantage is that there are no bossy landlords to deal with, making the overall experience of staying in such units easier and smooth for the tenants. Moreover, the hassle of maintenance and property upkeep is significantly reduced as more control is taken away from the landlords.

In a way, the build-to-rent model leads tenants towards a more flexible living arrangement, wherein they can lease out an apartment for the long haul or make an early exit if needed. The rent scheme further provides tenants with a sense of homeownership, along with better treatment.

A stimulant to construction

The depleting supply of housing has contributed to an unprecedented property price hike in New Zealand, limiting the entry of first-time buyers into the market. With build-to-rent, the investment would be aimed at building housing units specifically designed for this market segment. This investment is expected to flow in from foreign sources, in turn contributing to the national GDP and spurring economic growth.

Ultimately, increased housing supply would put downward pressure on prices, cooling the overheated property sector in NZ. If this model turns out to be successful, many other countries experiencing the problem of housing price surge may also consider build-to-rent as a solution.

The option to swap units

Typically, a build-to-rent agreement allows tenants the option to switch to a bigger unit within the same complex if they desire to do so. Essentially, this feature allows young families to move to a bigger house when they feel the time is right or simply after becoming parents.

Some families may also choose to downsize to smaller apartments, with the tenant’s interests being the key focus area around which the arrangement is made. With this unique feature, tenants can rent out co-working spaces in the complex instead of utilising their own units as offices. Meanwhile, it is usually easy to get approval for the same as the landlord would be well-versed with the tenants’ track record.

Additional amenities

The units under the build-to-rent scheme are normally built in an inhabitable and comfortable environment, providing accommodation to potential owners. These units are sometimes complemented with amenities like pools and outdoor spaces, gyms, communal working spaces, and cinemas to ensure tenants can make the most out of their residence. Moreover, tenants have the option of adding other facilities into their original arrangement, which include access to car charging stations, extra parking space, etc.

All in all, BTR units are primarily designed to serve tenants who intend to stay there and not to impress landlords who may never think of residing in them.

Given these benefits, the build-to-rent scheme can emerge as a much-needed solution to New Zealand’s housing problem. Meanwhile, it could spring up a wave of enthusiastic buyers and help the Kiwi economy recover some lost ground during the pandemic while offering a unique chance to prospective homebuyers to turn their dreams into reality.

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