More affordable rental homes for low-paid essential workers are entering Australia’s property market, and they’re being offered by a surprising group of landlords.
Build-to-rent (BTR) operators are constructing affordable apartments that will offer subsidised rents to low to middle income workers in critical sectors such as healthcare – despite the international trend of BTR operators charging higher than average rents.
In Melbourne, Mirvac has just opened a new BTR complex in Docklands with 20 affordable apartments, and Local Residential has opened its Kensington complex with 42 affordable and social impact units.
BTR – where a single company is the landlord for a building of rental apartments rather than a group of mum-and-dad investors – is still an emerging sector in Australia, with many of these rental apartments still under construction.
But what's been seen in the established BTR markets in the UK and US, is that BTR operators tend to charge above-market rents.
BTR operators don’t need to offer affordable homes in Australia, but governments are trying to incentivise them to construct more affordable homes in exchange for better planning outcomes and funding.
Mirvac BTR general manager Angela Buckley said the new rental complex in Docklands was the company’s first to offer affordable housing.
Mirvac's new LIV Aston Build-to-Rent complex in Docklands, Melbourne offers 20 affordable apartments. Picture: supplied
The Docklands complex has 474 purpose-built rental apartments – 20 of which will be offered to certain renters at a 50% discount on the building’s rent.
Essential workers on "moderate incomes" – which is about $70,000 per year in Melbourne but varies by city – who work near the complex will be able to apply for discounted rent.
Ms Buckley said the company added affordable housing to the property due to a planning decision for the project.
“Affordable housing is being provided in key locations in our cities to ensure they’re as productive and sustainable as possible,” Ms Buckley said.
A group of essential workers will get discounted rents while living at the LIV Aston property in Docklands. Picture: supplied
“We know essential workers are absolutely key to making sure our cities can thrive, whether its hospitality workers, nurses, childcare workers or from other industries.”
The arrival of affordable rental homes comes as healthcare, childcare and other essential workers on low to middle incomes are increasingly priced out of neighbourhoods located near their workplaces.
It’s forced many essential workers to live far from work and commute long distances, which has made it harder to attract and retain workers for these key jobs.
Mirvac also plans to add 99 affordable homes to its first BTR property in Brisbane, which will open with 396 rental apartments later this year.
However, the Queensland government will subsidise the rents for the affordable homes in the Liv Anura property under a pilot partnership.
“We think it's a great example of how affordable housing can be delivered efficiently with BTR,” Ms Buckley said.
Local Residential's Build-to-Rent property in Kensington, Melbourne will offer 42 affordable and social impact units. Picture: supplied
Record-low vacancy rates have fuelled rent-price growth across the country. Australia’s capital cities recorded a combined rental vacancy rate of 1.47% in July, compared to historical levels between 2-3%, according to PropTrack.
The combined capital cities have also saw rental prices increase 10.3% year-on-year in the June quarter, with the median weekly rent reaching $640.
PropTrack senior economist Anne Flaherty said the cost of renting an apartment had climbed across Australia, as persistently low vacancies and population growth drove demand for rental properties higher.
“Conditions for renters deteriorated further over the June quarter, with six of the eight capital cities experiencing rent growth,” Ms Flaherty said.
At least 25% of the 800 homes at the Aldinga housing development in Adelaide will be affordable. Picture: supplied
The rental market has been cooling down in recent months compared to the staggering growth seen last year, however housing groups continue to call for more rental housing of all types to be constructed urgently to help alleviate living costs.
The federal government has proposed tax incentives to encourage foreign companies to construct more purpose-built rental homes nationally, however the Coalition and some crossbenchers have blocked the changes in the Senate.
Property developers have also been offering homebuyers the chance to purchase affordable housing.
Villawood Properties recently reached an agreement with the South Australian government to build more than 800 homes in the Adelaide suburb of Aldinga, where at least 25% of the homes will be affordable.
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