The Rise of Build-to-Rent in Australia
Build-to-rent, also known as “multifamily housing” in some parts of the world, has long been a part of the property landscape in markets such as the US, the UK, and Continental Europe.
Closer to home, Japan leads the Asia Pacific region, with approximately 40 per cent of the region’s build-to-rent stock located there1.
Having developed and operated over 2,300 build-to-rent apartments in the US and the UK, and with another 2,800 in development, Lendlease's experience demonstrates the model of having a single institutional landlord rent out apartments is practical and profitable. In Australia, where housing demand remains high with limited supply, build-to-rent offers a viable alternative for renters by providing well-managed properties without the complexities of private strata arrangements. By shifting maintenance responsibilities to a single corporate entity, this model also streamlines property management and can lead to greater efficiency and savings in maintenance services.
A timely opportunity for Australian housing
Australia is now at the forefront of adopting this model to address its growing housing needs. During the housing boom of the early 2010s, escalating prices made the classic quarter-acre dream unattainable for many. Yet, at the same time, a surge in apartment construction across Sydney, Melbourne, and other urban centres contributed to a significant shift in attitudes toward renting.
With an increasing proportion of Australians acknowledging the possibility of long-term renting, developers began recognising a clear opportunity to offer purpose-built apartments to meet sustained rental demand. According to Lendlease Strategic Projects Executive Director Paul Checchin, the sector is helping to provide accommodation for the growing pool of renters:
“Our population is growing at just under 400,000 people per annum and household formation implies a need for around 200,000 dwellings pa. If the proportion of renters is moving towards 35%, it implies a need for around 70,000 rental dwellings per annum.
“The research we’ve done reveals the current traditional rental offer often falls short of expectations, but until now, there hasn't been a meaningful alternative. In today's market, the demand for purpose built, professionally managed rental accommodation is very strong.”
Changes to policy settings paving the way for Investors
Despite the growing demand, Australia’s build-to-rent industry faced challenges including regulatory uncertainty and tax structures. These factors affected returns for developers and deterred larger-scale investment. However, recent policy changes at both federal and state levels have helped improve the viability of build-to-rent projects. According to Checchin:
“Land tax concessions introduced by many states improved feasibilities overnight. Since then, the pipeline of build-to-rent projects has grown substantially.”
Today, the sector is growing with around 9,000 completed build-to-rent apartments in Australia, with around another 9,000 under construction and an additional 17,000 approved for development.
Lendlease contributes to this momentum, with three projects totalling around 1,700 apartments currently under construction in Australia.
Learning from established markets
Australia’s build-to-rent stock remains smaller than that of more mature markets. In the US, a long-term rental culture has evolved over the last few decades and the sector is now well established. For example, around 44 million residences are multifamily, which makes up 30% of overall housing2.
US authorities have incentivised multifamily development through programs such as the Low-Income Housing Tax Credit (LIHTC) and zoning initiatives that encouraged more housing supply. Meanwhile, the UK – though younger than the US market – still outpaces Australia by a factor of ten, supported by measures including Stamp Duty Land Tax (SDLT) relief.
An upward trajectory
Checchin sees only one direction for the Australian build-to-rent sector – upwards. Although many Australians remain unfamiliar with the concept, Lendlease research shows it resonates with renters. Tenants are responding to the increased security of tenure and the promise of professional property management and design.
Drawing from Lendlease’s experience in the UK, Checchin notes that tenants will often pay a premium for a better rental experience, including quick resolution of maintenance issues and access to high quality amenity.
“When talking to renters, many share similar frustrations – unexpected rent increases, difficulty getting repairs done or the uncertainty of not knowing how long they’ll be able to stay. Lendlease’s offering is designed to remove these common pain points by providing greater stability and a feel good renting experience.”
He emphasises that the greater security and convenience of build-to-rent, combined with modern amenities and strong focus on customer service, delivers a high standard of living that many renters find appealing. Lendlease’s research indicates tenants are willing “to pay a bit more for a significantly superior rental offer."
Future growth potential
With the Australian Government targeting the construction of 1.2 million new homes by 2029, build-to-rent can be a key contributor to housing supply – particularly if tax and regulatory frameworks continue to evolve.
A 2023 EY and Property Council of Australia analysis found that halving the managed investment trust withholding tax (MIT WHT) from 30 to 15 per cent could potentially triple the number of build-to-rent projects over the next decade.
Legislation passed in December 2024 to reduce the MIT WHT rate marked a pivotal moment for the sector, opening new opportunities for investors looking to build on this growing market. Meanwhile, Queensland’s projected population growth – bolstered by the 2032 Olympic Games – places Brisbane as a prime area for expansion, along with Melbourne's CBD where forecasts show that by 2043 the number of people living in the City of Melbourne is expected to increase by 65 per cent3.
“We know that rental payments are non-discretionary; people need to pay their rent,” says Checchin. “That translates to low volatility income, which is very attractive to investors. Over time, we expect investor interest in the BTR sector will continue to increase."
As attitudes toward renting continue to shift, build-to-rent appears set to play a decisive role in Australia’s broader housing future. By providing stability, efficiency, and quality service and amenity that contributes to building a sense of community for tenants, this model has the potential to transform the rental experience – and help meet the nation’s expanding housing demands.
1 https://www.jll.com.au/en/trends-and-insights/research/multifamily-in-motion-a-deep-dive-into-apac-living-sector
2 https://www.nahb.org/other/consumer-resources/types-of-home-construction/multifamily
3 https://www.melbourne.vic.gov.au/population-estimates-and-forecasts