Build-to-rent is an increasingly common model overseas, but is still a new concept in New Zealand.
Housing Minister Megan Woods’ “KiwiBuild reset” includes seeking opportunities for build-to-rent, a relatively new concept in New Zealand. In a very timely Big Issues in Business event, Massey University’s property researchers will discuss the pros and cons of the approach, alongside property industry representatives.
Professor Graham Squires, head of the Massey Business School property programme and Property Foundation chief executive, says build-to-rent simply means building dwellings specifically for rental, rather than owner-occupiers.
“It’s become increasingly popular overseas as home ownership is now beyond the reach of many people,” Professor Squires says. “Renting is becoming the alternative tenure of choice for some segments of the market, although you could argue this is really a diminished choice.
“There are questions about tenure and quality in the private rental market, and while we have seen new regulations in this space, more work needs to be done to ensure commercial developers are able and willing to provide quality rental accommodation. We certainly don’t want a slum landlord approach.”
David White, author of Massey University’s Home Affordability Report, says providing secure tenancies, including certainty around rental costs for longer periods of time, will also be important if the build-to-rent model is to have a positive impact.
“A lot of new stock comes into the property market at the owner-occupier end and then works its way down into the rental market,” he says. “That means rental properties tend to be of a lower quality, so that could change with a build-to-rent model.
“New, quality houses, that are professionally managed, would be built specifically for renters, and developers would need to make renting an attractive prospect in the medium to long term to be successful.”
David White and Professor Graham Squires.
There is no 'silver bullet' to fix housing affordability
Both academics say build-to-rent is not the “silver bullet” that will fix New Zealand’s housing market because a complex issue like housing affordability will never have a single solution. They do believe the Government should “cautiously encourage” the build-to-rent approach, but as part of wider set of responses to housing issues.
“I would like to see more innovation in the property market, including hybrid private-public models, cooperative housing and housing association models, which are private but non-profit,” Professor Squires says. “Build-to-rent must be viewed in this wider context.”
Mr White says central and local government and industry must also focus on the longer term.
“The life cycle of the product is really important,” he says. “This is a new asset class so it is going to have a substitution effect on other forms of tenure, and what works now might not meet the needs of the market in the future.
“Perceptions of long-term renting may change over time and we also need regulation around property management because, historically, we have not planned and managed our assets well over longer time frames.”
Event details
Professor Squires and Mr White will speak at three events in Auckland, Wellington and Palmerston North and they will be joined by industry representatives in each location. Their presentations will be followed by a panel discussion and questions from the audience. The free, public events are part of the Massey Business School’s Big Issues in Business series, which brings research and practitioner insights together to address the big issues.
Auckland – September 11, 5.30pm-7.30 pm
MBS 2.15, Massey Business School Gate 1, Lucas Creek Crescent, Albany
Wellington – September 12, 5.30pm-7.30 pm
ANZ Centre Level 18, 171 Featherston Street
Palmerston North – September 13, 3.30 pm -5.30pm
The Factory, 21 Dairy Farm Road
For more information, or to register: http://www.massey.ac.nz/bibs