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Build To Rent sector can no longer be overlooked

29 August 2019

News Release

Build To Rent sector can no longer be overlooked if we’re serious about fixing housing shortage

Prominent leaders from New Zealand’s property development, investment and construction sectors met this morning in Auckland to discuss the opportunities associated with the Build To Rent market, and are now calling on Government and Councils to prioritise enabling its rapid growth to help alleviate the housing shortage in the country’s biggest cities.

Build to Rent is a stand-alone housing sector that features rental homes under the collective ownership of an investment entity. Unlike the traditional rental market in New Zealand, which is beholden to the individual property management choices of ‘mum and dad’ investor landlords, the Build to Rent market – which has witnessed phenomenal recent growth overseas – typically provides for long-term tenancies, high quality build and a consistent level of service.

Co-convenor of this morning’s event, Paul Winstanley (JLL), says this changes the dynamic from one of landlord and tenant, to service provider and consumer; and one which is currently not catered for under New Zealand laws and regulations.

Winstanley was an active participant in the emergence of Build to Rent as a market segment in the UK. He says that while Build to Rent is not the sole solution some are still seeking for our housing crisis, its potential and our ability to introduce it quickly should not be underestimated.

“As of January this year, there were close to 140,000 Build To Rent properties either completed or in the process of being built in the UK. In 2013, the asset class didn’t even exist.”

“This phenomenal growth has been fuelled by changing social and economic norms and the need to address chronic housing shortages in its major cities and provide customers with a high quality and well managed rental product. These same dynamics are in play in New Zealand, so with the added benefit of being able to learn from the UK’s experience, we should be able to act fast to introduce this new asset class as part of the solution to our housing crisis,” says Winstanley.

Enabling the Build To Rent opportunity isn’t simply about identifying suitable greenfield sites or existing properties for conversion. With commercial development delivering strong investment and social returns, Peter Felstead (Deloitte) says a considered taxation approach will be required to attract sufficient investment to this sector.

“The common perception is that the inability for Build To Rent investors to recover GST on construction and other input costs is a key disadvantage impacting returns. This has prompted jurisdictions overseas, including the UK, to extend concessions for Build To Rent projects to mitigate the impact of irrecoverable GST.”

“While there is no silver bullet likely to arise from any changes to the tax and other policy settings, any such changes could be important on the margin, and frequently it is at the margin that investment decisions are made,” says Felstead.

Like tax policy, the current legislative position also has some tweaks which could be made to increase the sector’s commercial viability. With offshore capital attracted by yields that might be lower for New Zealand, but stack up internationally, recent changes to the Overseas Investment Act (OIA) have made things more difficult in the residential sector, notes Paula Ormandy (Kensington Swan).

“While the OIA includes an exemption for Build to Rent, this only applies to new builds and inadvertently excludes experienced offshore operators as well as several iconic New Zealand listed entities (technically “overseas persons”) who wish to enter the Build to Rent market for the first time.”

“People have been discussing the overseas investment issue, but the Residential Tenancies Act will also have an impact on the day-to-day commercials. Ideally, we need to be discussing Build to Rent as a separate product in the same manner as student accommodation or retirement villages – both of which are exempt from the RTA,” says Ormandy.

Company bios

JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit

Kensington Swan is one of New Zealand’s leading national commercial law firms, with more than 30 partners and 100 other lawyers in the Auckland and Wellington offices. As a full-service commercial law firm, our specialist teams collaborate across practice areas to provide complete legal solutions that are tailored to each client. We are committed to providing an unbeatable client experience. Kensington Swan is scheduled in early 2020, to combine with Dentons (, the world’s largest law firm, meaning we can support you and your organisation wherever you operate. For further information, visit

Deloitte New Zealand brings together more than 1300 specialist professionals providing audit, tax, technology and systems, strategy and performance improvement, risk management, corporate finance, business recovery, forensic and accounting services. Our people are based in Auckland, Hamilton, Rotorua, Wellington, Christchurch, Dunedin and Queenstown; serving clients that range from New Zealand’s largest companies and public sector organisations to smaller businesses with ambition to grow. Deloitte New Zealand is a member of Deloitte Asia Pacific Limited and of the Deloitte Network. For more information about Deloitte in New Zealand, go to our website Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see to learn more. Deloitte Asia Pacific Limited is a company limited by guarantee and a member firm of DTTL. Members of Deloitte Asia Pacific Limited and their related entities provide services in Australia, Brunei Darussalam, Cambodia, East Timor, Federated States of Micronesia, Guam, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, New Zealand, Palau, Papua New Guinea, Singapore, Thailand, The Marshall Islands, The Northern Mariana Islands, The People’s Republic of China (incl. Hong Kong SAR and Macau SAR), The Philippines and Vietnam, in each of which operations are conducted by separate and independent legal entities.


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