What does a build-to-rent scheme actually look like? And would it help renters find cheaper, stable homes?

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Carly Hulls had a newborn baby when she moved out of a rental property because of mould. Three months later, she moved again when her landlord decided to sell.

"We just had no sense of security," Hulls says.

"Our big concerns were around insulation, cleanliness, mould, because we've obviously had that happen before," she says. "And a lot of the properties that we looked at, for comparative price range were terrible… and super, super competitive.

"You were still getting 40 to 50 people turning up to inspections, you had to offer over what was listed as the weekly rental price. And they were not great."

Hulls and her family decided to move into a build-to-rent property in Homebush, in Sydney's inner west, eight months ago. Tenants are able to sign leases ranging from three months to three years, pets are allowed and residents are able to make alterations.

"For anyone who's stressed about renting, I would strongly suggest the build-to-rent option," Hulls says.

"Because it buys you the flexibility and the security and independence to live as you would in your own property."

The sector is in its infancy

The ground floor apartment in Mirvac's Liv Indigo building in Sydney's Olympic Park has one bedroom, a study, and a bathroom, with a 50 square metre internal floor plan and a 24 square metre courtyard.

Mirvac's General Manager of Build-to-Rent Angela Buckley says the apartment is listed for $680 per week, with the courtyard adding about $30 to the weekly price. This is compared to the median weekly rental value of $560 for the area, according to the Corelogic Housing Affordability report in May 2023.

Buckley says it is challenging to offer affordable rents in the sector without government support.

"I think what we're seeing is that we're at the infancy of the sector," she says. "While the commercial returns are there for market build-to-rent it's really challenging to deliver affordable product at the same level."

Build-to-rent targets the luxury market

President of the Real Estate Institute of Australia Hayden Groves said that the housing model as it currently stands in Australia, is generally targeted at higher income earners.

"Because of the cost of construction, the need for those investors … to get a certain level of return and the cost of construction being so prohibitive… they really will be looking at the bespoke luxury end of accommodation in the short term," Hayden Groves said.

"You're not going to see build-to-rent provide large amounts of affordable or social housing available to ordinary Australians."

Eliza Owen, CoreLogic Australia's Head of Research said the sector would only provide incidental relief to the rental crisis.

"The only way it's easing pressure on the rental market is indirectly because it might be taking some pressure away from other types of rental properties. "

Affordable housing by ballot

In Marrickville, in Sydney's inner west, a 54-room building spread over five floors is months away from completion.

The property sits on land donated by a church to developer Nightingale, which is working with the charity Fresh Hope to provide affordable housing targeted at low-and-middle income earners.

Prospective renters hoping to live in the building must join a ballot in order to secure a place in the building, with priority given to individuals with a disability, Indigenous Australians and single women 55 and over.

The rooms range between 25 to 30 square metres. Rents in the building are capped at 70 to 80 per cent of market rates for Marrickville, and Nightingale CEO Dan McKenna said it was the lowest possible figure that could be offered, even with donated land.

"It's really difficult at the moment to make it any lower than that to make it stack up," McKenna says.

"To jump again to 40 to 50 per cent of market rent, there needs to be significant input from government."

McKenna said there are opportunities to replicate the model across Australia, using donated land. "There are a lot of faith-based organisations that have access to incredible land in incredible spots that are under-utilised at the moment," he says. 

"This is a positive step, [but] I don't think it's the solution to the housing crisis. There are multiple solutions and this is just one of them".

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By Angelique Lu (Original ABC Article)