The number of build-to-rent units has boomed in Australia over recent years, with new projects being met with strong demand. But a new report shows the momentum might not continue.
Build-to-rent housing is proving popular among Australian rentals looking for more stable leases. Image: Getty
According to Knight Frank’s “Build to Rent Update” for the third quarter of 2025, the delivery of new build-to-rent units will hit a record high in 2025, topping the one set in 2024.
Build-to-rent (BTR) housing is a model in which developers construct multi-unit buildings and then retain the apartments to rent out, rather than selling them off to individual owners.
While already a popular form of housing in the UK and USA, where many rental buildings are commonly owned and managed by a single landlord, Australia has been playing catch up, with small-scale landlords still the dominant investors.
But with BTR offering greater security of tenure for renters, and these buildings commonly including attractive ammenities, Australians have been snapping up these leases as quickly as they've been appearing.
Last year, 4660 BTR units were delivered across 18 projects nationally, but 2025 is expected to beat that significantly with 6000 new units expected to be made available to renters, according to Knight Frank.
While these recent figures represent significant uplift from the previous five years, when new BTR unit delivery averaged at less than 2000 annually, Knight Frank's data indicated that despite demand from the consumer side, 2025 is where the upswing will stop.
The delivery of new BTR units is expected to slow considerably in 2026, with the delivery pipeline impacted by feasibility challenges such as financing and high input costs. Currently, around 4000 units are forecast for completion during the year.
According to John-Paul Stichbury of Knight Frank Australia’s valuation and advisory arm, it's now important that attention turns to “stimulating the next wave of growth”.
He noted that economic factors alone will not be enough to spur on investment in this sector.
“As well as an improvement in the macroeconomic environment, supportive government policy will also be vital for the long-term pipeline,” Mr Stichbury added.
“A consistent pipeline of new project commencements is needed to ensure that the recent slowdown is only a short-term blip, and central to this is the ability to activate the pool of approved schemes.”
LIV Anura is part of Mirvac's BTR portfolio, which includes four other developments across Melbourne and Sydney. Image: realestate.com.au
By Knight Frank’s estimates, there are around 20,500 units in the pipeline sitting at the DA-approved stage where construction has not yet commenced. Many of these might be awaiting elements such as securing the financial backing needed to start construction.
According to Knight Frank Australia’s head of alternatives, Tim Holtsbaum, governments can help by creating favourable and easy-to-navigate tax settings for investment in the sector.
“The BTR tax environment in Australia is hard to navigate and a more uniform approach across states would be beneficial,” he said.
Mr Holtsbaum welcomed the government’s move last year to grant concessions to foreign managed interest trusts investing in the sector, but said that “tax on foreign investors remains problematic and decreasing this burden for institutional investors from abroad will help to increase Australia’s competitiveness with other countries, where the barriers to entry from a tax perspective are typically lower”.
“As global investors scale up their exposure to the living sectors, more entrants are expected to enter the market as the sector is maturing,” Mr Holtsbaum said.
He noted that the fundamentals of the sector remain strong, with high occupancy rates and steady rental growth among BTR units.
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