Future-proof your life as a tenant

A number of new, purpose-built rental complexes are being developed aimed at giving tenants more security. reports.

Arc Onehunga is one of a host of new apartment developments springing up in the established inner-Auckland suburb, but it has one key difference: it is a purpose-built rental-only complex.

The $30 million, 48-apartment block is five minutes’ walk from public transport, including a train station, and close to hundreds of businesses in the town centre, with easy motorway access.

It is made up of one- and twobedroom apartments across three storeys, has car parking for 32 vehicles, and secure storage for bicycles. All homes have a balcony or outdoor space, heat pumps and high-speed fibre internet. Prices are expected to start from $530 a week.

Also on offer are long-term tenancy agreements with short exit clauses for tenants, the possibility to move within the complex, or other Arc developments, as their needs change, and the potential for some personalisation of apartments and pet ownership.

Arc opened its doors to potential renters for viewings last week, and has attracted strong interest – between Saturday and Monday morning alone, it held 25 personalised viewings.

Arc chief executive Kent Gardener said the build-to-rent sector offered renters security of tenure.

The goal was to enable renters to plan and live in a stable family home for as long as it suited them, he said. ‘‘We want Arc to be our tenants’ home, and somewhere they can feel secure is their home for life.

‘‘ ‘Love renting’ is our mantra, because we aim to revolutionise renting, with quality homes built, owned and managed with care for the long term by Arc for residents, who are all renting.’’

His company wanted ‘‘to take the lord out of landlord’’, and he was committed to treating tenants as valued, long-term customers, he said.

The build-to-rent concept is relatively new to New Zealand, but is well-established in countries like the United States, the United Kingdom and Germany.

Advocates say the emerging sector could be one of the solutions to the housing crisis,

but questions remain around the Government’s policy for the sector.

A new global report by commercial real estate firm JLL identified New Zealand as a high barrier market. That meant it had potential because of housing demand and economic performance, but government regulation and policy was holding back investors.

JLL Australasia build-to-rent head Paul Winstanley says the country’s build-to-rent sector is ‘‘within touching distance’’ of benefiting from substantial investment from the global living market.

While it was an exciting sector for investors, if it could attract investment and development the biggest winners would be Kiwi renters, he said. ‘‘It is a real opportunity to raise the bar for rental accommodation to the benefit of renters.’’

Winstanley spent many years working in the build-to-rent sector in the UK and saw firsthand the difference that could be made to the renter experience.

‘‘We are starting to see progress with some pioneering investors and developers delivering quality long-term rental offerings, but build-to-rent schemes here are not prevalent enough to make a real difference to renters.’’

The main thing holding the sector back was a high barrier to entry, but the Government could change that, he said. ‘‘They are not insurmountable [barriers], but they require Government leadership and action to be overcome and to make the sector a reality. Thankfully, relatively moderate policy changes would kickstart it.’’

Such policies include changing the Overseas Investment Act’s treatment of the sector as a residential asset class, placing no restrictions on interest deductibility for tax calculations, and offering depreciation relief for tax purposes as is the case with commercial buildings.

Winstanley says providing such support should not be a difficult decision for the Government given the need for increased investment in good quality housing and a better deal for renters.

‘‘Build-to-rent can clearly be a significant part of the solution for some of our housing problems, and we need to take advantage of it now.’’

To date, the Government has not made its intentions for the build-to-rent sector clear, apart from confirming that the new build exemption to its new interest deductibility tax policy would extend to the sector.

But in a speech to the Property Council’s annual conference last month, Housing Minister Megan Woods acknowledged the potential of build-to-rent and that there were barriers to its development.

‘‘The Government is committed to supporting more affordable housing supply across all forms of housing, including build-to-rent,’’ she said.

Currently, that means a Te Tua¯ papa Kura Ka¯ inga – Ministry of Housing and Urban Development reference group exploring the issues and ideas relating to the sector, and officials are set to report back to the minister.

The Government is scheduled to make an announcement on its plans next month.

In the meantime, the National Party released its new Boost Build-to-Rent Housing Bill last week, and invited the minister to take it up.

The party’s housing spokeswoman, Nicola Willis, says it is time for action.

The bill would exempt buildto-rent developments from aspects of the Overseas Investment Act and ensure build-to-rent properties were treated as commercial buildings under the Income Tax Act.

It enables investment in purpose-built rental properties which provide greater security of tenure, professional landlord services, and the experience of living in newly built accommodation, Willis says.

‘‘Kiwis are crying out for fresh thinking and new ideas to solve our housing woes, and to help supercharge housing supply in this country.’’

Despite the barriers facing the build-to-rent sector, there are developments under way.

New Ground Capital is at work on 487 new dwellings in Auckland and Queenstown, of which 176 will be retained as long-term rentals. It has already completed several build-to-rent developments.

Shopping centre owner Kiwi Property is developing build-torent accommodation at its Sylvia Park and Lynn Mall retail centres, and the Du Val Group is raising funds to establish some build-to-rent developments.

And besides Arc Onehunga, a Jasmax-designed, 13 apartment renters-only complex in Sandringham was completed early this year.

‘‘Arc wants to take the lord out of landlord and treat tenants as valued, long-term customers.’’ Kent Gardener Arc chief executive