Who gains from build-to-rent apartments?,
On the night of the last Census, over 122,000 people in Australia were reported as homeless.
This issue is especially concerning for women, as they are more vulnerable to homelessness.
In fact, in 2021, more than 80 percent of the increase in homelessness was attributed to women.
Dan McLennan, a developer, explains, “We were determined to make a positive impact for women over the age of 55.”
He acknowledges the challenging statistics regarding the housing crisis and its particular impact on women.
McLennan is the CEO and co-founder of Local, a Melbourne-based development firm that focuses on build-to-rent housing.
The company’s latest project, Local: Kensington, collaborated with Women’s Property Initiatives to allocate 10% of its 477 apartments.
These designated apartments were set aside for social and affordable housing or specialist disability accommodation units.
McLennan explains, “If you’re in the housing sector, your community impact isn’t about volunteering for a charity on weekends.”
He believes the impact should be tied directly to the core business, which is the housing provided.
Build-to-rent housing has faced criticism at times for being a temporary fix to Australia’s ongoing rental crisis.
Economist Diaswati Mardiasmo points out that build-to-rent projects often target luxury products aimed at high-income, dual-income professionals.
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Local: Kensington has faced criticism for its market-rate apartments, which are priced significantly higher than the suburb median.
This pricing is due to the high-end amenities offered in the development.
For instance, a one-bedroom apartment at Local: Kensington starts at $624 per week.
This is 41% higher than the median price for a one-bedroom unit in Kensington.
Meanwhile, a three-bedroom apartment in the development is priced at $1,203 per week, 60% above the median.
The ongoing debate about build-to-rent’s role in the rental crisis is one McLennan is accustomed to addressing.
He argues, “Many of the debates around build-to-rent are based on a false assumption that it’s a standalone solution.”
McLennan adds, “I don’t fully support the trickle-down idea that increasing supply will automatically solve the housing issue.”
He believes rental housing must be affordable at its price point to truly address the housing crisis.
However, he acknowledges, “Right now, we’re not providing anything.”
In recent years, high construction costs and caution from overseas investors have made it harder for developers to complete large build-to-sell projects.
McLennan explains, “The role of build-to-rent is to provide supply, especially in times like these.”
He draws an analogy to the utilities sector, saying build-to-rent is like providing baseload, ensuring continuous supply.
Recently, the federal government introduced new tax incentives for build-to-rent developments that include at least 10% affordable housing.
Economist Hal Pawson has praised this strategy as a way to make build-to-rent housing more affordable for average Australians.
McLennan finds the government’s tax changes “really exciting” and sees them as a positive development.
He adds, “We’ve proven that it can be done successfully and it works.”
He believes the changes will ensure genuinely affordable housing is built in areas where people actually want to live.
