Tenants become customers
Investors and property developers are calling for the Government and councils to back build-to-rent schemes to help address the housing crisis.
Build-to-rent is a new sector in housing investment that builds accommodation for the rental market. It typically provides more security for tenants because it doesn’t work on the capital growth model, instead providing longerterm tenancies.
Build-to-rent schemes in Britain have proliferated since their advent as an asset class in 2013.
JLL head of research and consultancy Paul Winstanley was an ‘‘active participant’’ in the sector as it emerged in Britain and said this form of housing investment changed the relationship between tenant and landlord to one much more akin to customer and service provider. ‘‘It is in the landlord’s interest that you stay as long as possible.’’ Winstanley said the tenant had the comfort of knowing the landlord did not want to sell.
Rent reviews were typically made against the Consumer Price Index, a yearly adjusted measure of the cost of goods and services, under this model and only at the end of a three-year tenancy would it be reviewed against market prices. ‘‘As of January this year, there were close to 140,000 build-torent properties either completed or in the process of being built in Britain,’’ Winstanley said.
The same dynamics that drove build-to-rent in Britain, namely a shortage of housing and affordability, existed here.
Haven Funds had been doing work in the area, said director Kerry Hitchcock, and would look to have a fund together by the end of the year that would own a largescale residential property which would give tenants a ‘‘decent experience’’, sadly lacking in New Zealand. Haven was working with the Financial Markets Authority to put a licensed operation together, he said.
Real Estate Institute chief executive Bindi Norwell supported increased build-to-rent opportunities to support housing affordability and to deal with shortages. With a current deficit of 46,000 houses in Auckland alone the country needed to look to a wide range of solutions, including build-to-rent, she said.
Winstanley said the most difficult part of the British experience was getting councils to accept the schemes through the planning process. He said government involvement in Britain had been ‘‘massively important’’ to getting things moving and would be crucial in New Zealand too.
‘‘It is in the landlord’s interest that you stay as long as possible.’’ Paul Winstanley