The new government is considering loosening conditions to allow more overseas investment for build-to-rent housing. What is build-to-rent housing and why does it matter?
The coalition has said it plans to amend the Overseas Investment Act to make it easier to develop build-to-rent housing developments in New Zealand.
A leaked document shows just how far the Associate Finance Minister Chris Bishop wants to push the envelope, allowing foreign buyers to invest in any residential land to build new houses or accommodation facilities, even a single additional dwelling, if the buyer did not intend to live in them.
“It’s nuts that retirement homes, rest homes and student accommodation have an easier ride through the Overseas Investment Act than build-to-rent developments. We will make sure they are treated the same,” Bishop said.
What is build-to-rent housing?
Build-to-rent housing includes purpose-built residential developments primarily aimed at long-term rental occupancy rather than individual property sales.
Developments are often medium to high-density apartment complexes or houses explicitly tailored for the rental market rather than owner-occupiers. Professional property management teams typically oversee day-to-day operations.
The concept is regarded as a ‘Gen Z’ solution to New Zealand’s housing crisis, providing housing security for long-term renters, a larger pool of higher quality rental stock, and a degree of protection from unexpected rent increases. Some developments offer up to 10-year leases and scope for tenants to make minor changes and keep a pet.
The country’s largest BTR development will soon open its doors
Located across from Auckland’s Sylvia Park, Kiwi Property’s brand-new $240 million complex offers tenants the flexibility of renting, paired with the stability of home ownership.
“Being able to call something home is really difficult in the current market. We want people to stay as long as they can and put down their roots and really call it home,” said Clive Mackenzie, Kiwi Property’s CEO.
“It’s really about providing security of tenure. If you want to stay for long-term you can. But also, if you’re a young couple and you’re saving up for a deposit – it gives you a great place that you can live for a couple of years while you’re saving that deposit,” he said.
Opening the door to shoddy foreign investment?
While most people welcome a larger pool of rental stock, others fear National’s plans will open the door to shoddy large-scale build-to-rent complexes that will blossom into ghettoes.
Roy Thompson, the co-founder and managing director of New Ground Capital – a pioneering developer of Build-to-Rent housing investments for institutional investors in New Zealand, said such fears were unfounded.
“The investors we’re talking to are people who do this in a thoroughly professional way and understand communities have to be created along with attractive places to live, and they do it well. Ultimately, they build the kinds of places that 99% of people renting in New Zealand would dream about living in. And even if they wanted to do something that wasn’t that good, the New Zealand planning regulations are so tight that they wouldn’t be able to do it anyway,” he said.
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