More affordable rental homes for low-paid essential workers are becoming available in Australia’s property market, thanks to an unexpected group of landlords.
Landlords offer affordable rentals for essential workers. Build-to-rent (BTR) operators are developing affordable apartments with subsidized rents for essential workers, unlike the global trend of higher rents.
In contrast to the global trend of charging above-average rents, landlords offer affordable rentals for essential workers in this initiative.
In Melbourne, Mirvac has recently unveiled a new BTR complex in Docklands featuring 20 affordable apartments. Meanwhile, Local Residential has launched its Kensington complex, offering 42 affordable and social impact units.
Build-to-rent (BTR), where a single company manages an entire building of rental apartments rather than multiple individual investors, is still a developing sector in Australia. Many of these rental properties are still under construction.
In established BTR markets like the UK and US, operators generally charge above-market rents.
Though not required, BTR operators in Australia are encouraged by governments to build affordable units through incentives.
Angela Buckley, General Manager of BTR at Mirvac, said the Docklands complex is their first with affordable housing.
The Docklands complex includes 474 rental apartments, with 20 offered at a 50% discount on standard rent.
Essential workers earning around $70,000 annually in Melbourne, or varying by city, can apply for the discounted rent.
Ms. Buckley explained that the inclusion of affordable housing in the project was a result of a planning decision.
“Affordable housing is being introduced in key locations within our cities to enhance their productivity and sustainability,” Ms. Buckley said.
“We recognize essential workers in hospitality, nursing, childcare, and other fields as crucial to our cities’ success.”
Affordable rental homes are timely, as essential workers with moderate incomes are being priced out of neighborhoods near their workplaces.
This situation forces many essential workers to endure long commutes, making staff retention more challenging.
Mirvac plans to include 99 affordable homes in its Brisbane BTR property, opening later this year.
The Queensland government will subsidize rents for affordable units at the Liv Anura property through a pilot partnership.
“We believe this is a prime example of how BTR can effectively deliver affordable housing,” Ms. Buckley stated.
Record-low vacancy rates have driven up rent prices across Australia. In July, the combined rental vacancy rate for the country’s capital cities was just 1.47%, compared to the usual 2-3%, according to PropTrack.
Rental prices in these cities also increased by 10.3% year-on-year in the June quarter, with the median weekly rent reaching $640.
PropTrack senior economist Anne Flaherty noted that renting an apartment has become more expensive nationwide, as low vacancy rates and rising population have boosted demand for rental properties.
“Renting conditions worsened further in the June quarter, with six of the eight capital cities seeing rent increases,” Ms. Flaherty said.
The rental market has been slowing down recently after the rapid growth seen last year. Despite this, housing groups are still urging for more rental properties of all kinds to be built quickly to help reduce living costs.
The federal government has proposed tax incentives to encourage foreign companies to build more rental homes across the country. However, these changes have been blocked in the Senate by the Coalition and some crossbenchers.
Property developers are also working to offer affordable housing options to buyers.
For example, Villawood Properties has recently made a deal with the South Australian government to build over 800 homes in the Adelaide suburb of Aldinga, with at least 25% of these homes designated as affordable.
