For generations, owning your own home has been the Australian goal. For a growing number of people, it's slipping out of reach. Into that gap has stepped "build to rent" (BTR): large apartment and housing developments built to be rented out, not sold.
BTR is being sold as part of the answer to the housing crisis, and governments are backing it with tax breaks. It does add rental supply. But it's worth asking who really benefits, and what it means for the people who end up renting for life instead of building equity.
This is an opinion piece, so here's my position up front: BTR adds rental supply, but without strong tenant protections it locks a generation out of building equity, and it suits governments that would rather manage a housing crisis than fix it.
What this means if you're trying to build your first home
If you're saving to build, BTR doesn't change the basics:
- Renting doesn't build equity. Every rent payment is gone. Every mortgage payment buys you a bit more of an asset.
- Rent can still go up. BTR offers longer leases and professional management, but rent is still set by the market.
- Every year renting is a year not owning. If home ownership is your goal, a nice BTR apartment with a gym can make it easier to put off.
None of that means you shouldn't rent in a BTR development. Just go in with your eyes open, and keep your own plan to own.
What is build to rent?
In a BTR development, one owner (usually a developer or institutional investor such as a super fund) keeps the whole building and leases every dwelling. It's common in the US and UK and relatively new in Australia.
BTR projects are usually large, professionally managed, and come with shared amenities like gyms, rooftop areas and co-working spaces. Because there's one owner, there's no body corporate. A property or building manager runs the lot on the owner's behalf.
Why housing is so expensive
There's no single cause, but the main ones are well known:
- Supply hasn't kept up. Planning delays, limited serviced land, high construction costs and a shortage of trades mean new housing can't keep pace with demand.
- Population growth. Natural increase and immigration both add demand, concentrated in the major cities, Brisbane included.
- Prices haven't corrected. Australia didn't see the price falls the US had after the 2008 financial crisis. Policy has generally aimed to keep the market stable, which protects existing owners but does nothing for buyers trying to get in.
Anthony Painter
The government's stake in housing
Housing is one of the pillars of the Australian economy. Construction, real estate, finance and the industries around them make up a big share of economic activity. State governments collect stamp duty and land tax, councils collect rates, and the federal government relies on the economic growth housing drives.
A sharp fall in house prices would hurt all of that, and the voters who own homes. So governments have every reason to keep prices stable rather than let them fall to more affordable levels.
That's where BTR comes in handy. If people can't afford to buy, a well-run rental sector takes some pressure off governments to deliver affordability. Renters are housed, prices stay up and the revenue keeps flowing. That's the bacon being saved.
The incentives on offer
In 2024 the federal government legislated tax concessions for eligible BTR developments, including:
- a lower withholding tax rate (15% instead of 30%) for foreign investors in eligible managed investment trusts
- a faster capital works deduction (4% a year instead of 2.5%)
To qualify, developments must stay in single ownership for at least 15 years, offer leases of three years or more, and include at least 10% affordable dwellings. Some states offer land tax concessions too.
The affordable housing requirement is welcome. But note who the main incentive is aimed at: foreign institutional investors.
Could we pay for housing another way?
Australia is one of the world's biggest LNG exporters, yet critics argue our resource taxes return far less to the public than countries like Qatar or Norway get from their resources. More revenue from resource taxes could fund public and affordable housing directly, rather than subsidising private landlords to provide it.
Raising resource taxes is politically difficult, and the industry argues it would deter investment. But it's a debate worth having before we hand the rental market to institutional owners.
Arena Quarterly no.11
Read more about the disparity between Qatar and Australia's LNG taxation - HOLD MY PEN!
The case for BTR
To be fair, BTR has real benefits:
- More rental supply, delivered at scale.
- Security for tenants. Longer leases and no risk of the landlord selling the property out from under you.
- Professional management. One owner with a long-term interest in the building usually means better maintenance than the average private landlord.
- Affordable dwellings, where the tax concessions require them.
The case against
No equity, ever
Tenants pay for decades and own nothing at the end. Home ownership has been the main way ordinary Australians build wealth. Renting for life takes that away.
Market rents and extra fees
Rents in BTR are set by the market and reviewed regularly. In Queensland, rent can only be increased once every 12 months, but there's no cap on how much. Some operators also bundle amenity and service fees into the rent.
Integrated management
Corporate landlords often use management, maintenance and service companies under the same ownership umbrella. That vertical integration can let costs be marked up and passed on to tenants, who have little ability to question them.
Profits leaving the country
The headline tax concession is aimed at foreign investors. Once developments are bundled and on-sold to larger international funds, rental income from Australian tenants can flow offshore, often through structures designed to minimise tax here. Foreign investment rules provide some limits, but critics argue they aren't strong enough to stop it.
Private equity has a track record overseas of buying up essential services, such as hospitals in the US, then raising prices to lift returns. There's no reason to assume housing would be different without strong regulation.
A modern-day feudal system?
The comparison is a bit cheeky, but it isn't far off. In medieval times, lords owned the land and serfs paid to live on it, with the lord's agents collecting the rent and keeping order. In BTR, corporate owners hold the land and the buildings, property managers collect the rent and enforce the lease, and tenants pay for the privilege of staying.
Modern tenants have legal protections serfs never had. But the imbalance of power is real: the owner sets the terms, the tenant either accepts them or moves, and there's no path to ownership along the way. Renters "pay, pay and keep paying", building someone else's wealth instead of their own.
What would make BTR fair
If BTR is going to be a big part of our housing future, it needs:
- strong tenant protections, including limits on rent and fee increases
- transparency on fees charged by related management companies
- genuine, permanent affordable housing requirements
- tax rules that keep profits from Australian rents contributing to Australian revenue
- continued support for home ownership, including more serviced land and faster approvals
The bottom line
BTR adds rental supply, and for some people it's a better rental experience than the alternative. But it isn't a housing affordability solution. It's a way of managing a housing affordability problem, one that keeps prices high, keeps revenue flowing and turns would-be owners into lifelong tenants.
If you want to own your own home, BTR won't get you there. Keep saving, keep your options open and don't let a nice gym talk you out of your plan.
