Kiwi Property says tax changes needed to boost build-to-rent sector

Kiwi Property's planned Sylvia Park complex, which includes long-term rentals.
Kiwi Property's planned Sylvia Park complex, which includes long-term rentals. Photo credit: Supplied/RNZ

Story by Gyles Beckford of RNZ

Commercial property developer Kiwi Property Group is urging the government to make tax and investment rule changes to boost build-to-rent developments as part of the solution to the shortage of affordable housing.

The company has just released a survey showing hopes of owning a home are fading, particularly with younger people, with 85 percent saying they would consider renting if they could avoid barriers such as quarterly inspections, and strict rules on customising the property.

Chief executive Clive Mackenzie said build-to-rent is just emerging in New Zealand, but could be significant in addressing the shortage of housing.

"Build-to-rent has the potential to really play an important role in the New Zealand housing equation by providing quality accommodation, providing residents with secure tenancies, as well as offering a great range of amenities."

Kiwi Property is close to offering 295 units for long-term renting as part of Auckland's Sylvia Park retail and business centre.

Mackenzie said more than half of those surveyed were dissatisfied with traditional renting with short-term tenancies, variable quality, and rising rents, but build-to-rent offered long-term tenancies.

The developments are new to this country but common in the US, UK, Europe, and gaining popularity in Australia.

He said the company had plans for a similar development at its LynnMall Shopping Centre, and was helped by a planning designation of being a town centre.

KiwiSaver provider Simplicity has also entered the build-to-rent sector with plans for a 330-unit complex in Remuera.

Mackenzie said the investment of KiwiSaver funds in such projects was welcome, but overseas investment rules should be relaxed to allow greater offshore participation, along with other incentives, as has happened across the Tasman.

"The Australian Federal government has doubled the depreciation rate specifically for build-to-rent to get the asset class going and provide an incentive to them, and those are the types of things that can be done to help solve the housing crisis."