The rental market needs an increase in supply

Increasing rental supply is an important aspect of ensuring that there are more affordable housing options available for people who need it.

According to figures from for the December 2021 quarter, the median cost of renting a house in Perth can be as high as $450 per week and the vacancy rate is just 2.5%. For apartments, the median rent can reach $410 per week and the vacancy rate is less than 2%.

One solution to boost rental supply and bring more affordable options to market is to facilitate rental-to-build projects.

Build-to-rent offers an effective longer-term solution to many of our current and long-term rental problems, but current tax parameters discourage investment in this sector.

In simple terms, to be built apartment projects are designed and built by a developer who retains ownership of the building upon completion.

The apartments are then let directly to tenants by the developer, who also manages and maintains the complex. These developments sometimes have the support of an institutional investor such as a pension fund.

Build-to-let projects differ from traditional build-to-own models, where a real estate developer can build an apartment complex and then sell the units to individuals, who will choose to either live there or rent them out as apartment buildings. shift.

Build-to-let projects can offer greater market accessibility through options such as security of tenure through longer rental periods, centralized resort management, and a variety of on-site amenities. They can also incorporate social or affordable housing options.

To level the playing field and encourage the development of affordable rental construction projects, we are demanding changes to federal and state tax obligations, particularly managed investment trusts (MIT), property tax and business tax. goods and services (GST).

Embracing these changes and allowing enough time for the market to react will take time, but there is strong evidence that build-to-let projects in North America and the UK have become an attractive investment opportunity for institutional investors. on a large scale and provided a much-needed supply of affordable rental housing.

Recognizing the important role this emerging sector can play, the New South Wales government recently introduced a land tax concession for construction projects to let until 2040.

UDIA WA recommended that the State Government replicate this concession and encourage the Federal Government to modify the MIT and GST parameters to support the delivery of build-to-let projects in Western Australia in the next State Budget.

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