Could Build to Rent revolutionise renting in Aotearoa?

Join the New Zealand Green Building Council and the Urban Design Forum for a webinar panel discussion, Build to rent, sustainable, low carbon communities, 12pm 19th October online.

Image credit: Liam McRoberts

Build to Rent (BTR) is a new housing model emerging in Aotearoa New Zealand. As BTR grows, it is timely to ask: what does the model offer for New Zealand? Is BTR a housing model that we can shape for the Aotearoa context; responding to our housing crisis, climate mitigation targets and supporting wellbeing outcomes? Can the BTR model be an urban development shift-change toward more sustainable urban neighbourhoods?

What is Build to Rent?

BTR are housing developments purposely designed and built for long-term rental, held in single ownership and managed by a professional landlord. This model can be provided through a range of typologies from standalone homes and terraced houses to apartments – though large scale higher density developments at scale are most common internationally. As a long-term investment for developers, there are strong motives for BTR to provide quality homes that are great places to live long-term. Typically, a range of shared services and amenities are provided for residents such as laundry facilities, utilities, gardens, common rooms, or gyms, and residents benefit from flexible, secure long-term tenure. Compared to most market renting in NZ, BTR provides a higher quality of life with a greater opportunity to personalise a home, including having pets, putting up pictures and decorating your home.

BTR is distinct from co-living or rent-to-buy models. The BTR model takes a long term view of both tenure, and development metrics, seeking modest returns over 20-30 years, rather than the immediate cost recovery model of conventional build-to-sell development. Build to rent is also integrated, avoiding the fragmented ownership of apartment buildings with a single institutional owner.

What does BTR look like overseas?

BTR has an international track record, which Aotearoa can learn from. In the United States there are around 21 million BTR homes, largely low-rise and affordable suburban apartments, known as ‘multi-family’ housing. Over time, developers have created strategies to ensure they provide quality affordable homes for ‘multi-family’. In Europe, long-term renting is largely unexceptional because it is a secure and liveable housing option. For example in Berlin and Zürich, home ownership is very low (9% in Zürich) and the majority of people rent, including in rental cooperatives which is a form of BTR. Across Europe, investment in BTR has increased from 11% of the total real estate investment in 2011 to 23% in 2020. Mature BTR markets such as the Netherlands, Germany, Poland have been helped by strong rental legislation, supportive planning controls and suitable financial products and terms.

In recent years, BTR or ‘multi housing’ has begun to expand across the United Kingdom, with 40,000 completed units and over 100,000 in the pipeline. UK research found that the average completed BTR development created 212 units and now BTR represents one in four new homes built in London. BTR residents rate their living experience more highly than residents renting in build-to-sell developments and BTR developments are having to meet resident preferences and expectations for quality facilities and management, and apartments suitable for families. While investment in BTR boomed during the pandemic, BTR developments also received criticism from residents which suggests that standards for minimum dwelling size and amenity provision could improve resident wellbeing and quality of life.

BTR is new in Australia, with the first development fully BTR development completed in Perth in July 2021. There are an estimated 15,000 units in the pipeline across Australia, with most developments offering 300 or more units.

Why is BTR a compelling opportunity for housing in NZ?

First, BTR offers a better quality of life for renters. Currently, for the 1.4 million plus New Zealanders who don’t own their home, renting is an insecure, inadequate and largely unaffordable housing option. It is not uncommon to move house more frequently, with impacts on education, employment, connection to health services, participation & sense of belonging in a community. Compared to owner-occupiers, renters also experience poorer housing quality, such as cold, damp, and mouldy homes, which affects people’s health and wellbeing. Legislative reform is improving rental quality and security in Aotearoa, but housing costs are still high for renters, and many are not allowed to own pets, hang pictures or decorate. BTR, as a long-term rental option, supports residents to ‘put down roots’ in their neighbourhood.

In Aotearoa, the demand for rental housing continually outstrips supply such that landlords are simply not incentivised to maintain their assets well and instead offer poor quality housing at an inflated price. BTR developments could make a significant contribution to the housing shortage in cities like Auckland, for example, through supplying high-density housing. In the local property market, BTR is increasingly considered an attractive new prospect for investors and developers alike.

There is a possibility that widespread BTR could be a catalyst for better residential tenancy laws, and perhaps tenure neutrality where renting is no longer considered inferior to ownership. BTR also provides a more ethical avenue for investment in property and property management, with institutional objectives and accountability that provide quality living environments, including a transparent, bias-free tenancy process. Overall, however, various changes to planning, tax and property legislation, regulations and controls would be required to help BTR to meaningfully contribute to housing supply, quality and affordability in Aotearoa.

Furthermore, the BTR model also has the potential to increase sustainability and climate responsiveness in urban development. The locational context and accessibility of high-density BTR development is a key factor that can reduce operational and embodied emissions from urban development and support low-carbon lifestyles. Being close to frequent transport routes and amenities reduces carbon emissions from travel and enables residents to enjoy convenient, accessible and sustainable lifestyles. An example of this that Kiwi Property has just announced is 540 BTR apartments for Sylvia Park and LynnMall situated close to local shopping centres and train stations. Ockham’s Modal all-rental development in Mt Albert is located close to two train stations, has no on-site parking, but provides a shared electric car for residents and dutch-style cycling parking.

With a long-term view, BTR developments often prioritise sustainable design. Higher upfront costs (for reduced operational costs) can be spread across decades rather than needing to be recouped at sale. A leading example of this is Element27, recently completed in Perth, which is a carbon neutral certified BTR apartment. Auckland’s 26Aroha supports car-free and low waste living and the building was designed to minimise embodied and operating carbon. Kiwi Property are also targeting GreenStar certification for their BTR developments. Sustainable, high-density developments should also provide access to public spaces and natural spaces, such as shared gardens, mature trees and green infrastructure. Developments should sit well in their context, activating the street and public spaces (internal or external) and contributing to the neighbourhood character and form.

BTR has the potential to improve apartment living standards in Aotearoa by delivering a broader range of apartment typologies, especially for families. At present, build-to-sell apartments are predominantly 1- and 2-bedroom units with larger units less common (and more expensive). As apartments become home for more New Zealanders, they need to meet or exceed the quality of life that people expect from a standalone home. This means apartments require adequate unit sizes (including size of bedrooms, balconies and bathrooms) with universal design and thoughtful consideration of privacy, aspect and ventilation.

What makes a house or apartment feel like home is also influenced by the neighbourhood and community context. The scale of international BTR developments have enabled developers to provide varied, quality amenities for residents on site. Future residents at the Lynn Mall or Sylvia Park BTR will have access to a rooftop terrace, private gyms and co-working spaces. Even at a smaller scale, the 13-unit 26Aroha includes a shared rooftop garden and terrace, office space and laundry facilities. Modal residents share a roof-top lounge area.

Built environment professionals have a role to play in how BTR continues to emerge and transform renting in NZ, supplying hundreds and thousands of units over the coming years. Quality urban design and sustainable building strategies are crucial to making the most of this opportunity. At present, BTR in New Zealand has a good track record of sustainable, quality design, but often at a premium price and small scale. As more developments are completed, and this model scales across our cities, BTR will likely become the preferred rental option in Aotearoa, as we have seen internationally. BTR could help to resolve some of our most significant housing issues, respond to our climate crisis and improve the wellbeing of our families and communities.

To hear more about Build-To-Rent, the New Zealand Green Building Council and the Urban Design Forum presents a webinar panel discussion ‘Build to rent, sustainable, low carbon communities’. Join us online, 12pm 19th October

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top