The new government will have to move quickly to ensure opportunities to make build-to-rent developments more viable are not missed, experts say.
New Zealand has long had a shortage of rental stock, and now strong net migration is adding to the existing pressures in the rental market.
Many in the property sector believe the build-to-rent model, which involves the development of multi-unit residential buildings for long-term rentals, rather than sales to individual owners, could be one solution.
It is a relatively new entrant to the New Zealand market, with pioneer New Ground Capital completing its first 49 home development in 2018.
Since then, the sector has grown, and there are now a total of around 2066 homes in 48 build-to-rent developments nationwide, according to new CBRE figures.
The figures also show there are currently 1076 homes across eight projects in the active pipeline. These are either under construction or have been issued a building consent, and they are all in Auckland.
CBRE associate director of research Tamba Carleton says there are no build-to-rent projects in construction outside of Auckland, although some are being planned.
Taking into account the developments with resource consent or in the design stage, the total pipeline is 5556 homes across 107 projects as of November, she says.
But there could have been more in the works.
Buddle Findlay partner Paula Ormandy says Property Council calculations suggest that if the right legislation had been in place over the previous term of government, 8000 build-to-rent homes could have been built.
Those 8000 homes could have housed around 16,000 people, and given them warm, dry, secure rentals where they could put down roots in the community, but instead 16,000 people missed out, she says.
“We don’t want another 16,000 or more people to miss out, because we haven’t sorted out the issues that are holding back investment in this sector.”
“There is some momentum with build-to-rent, but it is in spite of the regulatory issues that are holding investors in the sector back.”
The Overseas Investment Act (OIA) needs changes to give international investors greater certainty, especially around liquidity, while depreciation deductions should be allowed, and tenancy law updated, she says.