The call for affordable rental housing is loud and with interest rates, household bills and the general cost of living on the rise, it is the perfect scenario for the retirement living industry to cash in on.
The major area of interest to village operators could be Build To Rent.
Two big Australian Government’s announcements demonstrate that BTR is here to stay. The first is to halve the Managed Investment Trust withholding tax rate from 30% to 15% for overseas investors in BTR.
Even bigger is the increase in depreciation allowable for BTR projects, from 2.5% to 4%, effectively allowing a BTR project to be depreciated over 25 years rather than 40 years.
Also on the horizon is the Housing Australia Future Fund – which will deliver $10 billion to build 30,000 affordable homes. The Retirement Living Council is working to get retirement villages included in this social housing.
But will operators take the risk to commence new projects? Lowering the MIT and increasing depreciation will only work if local Councils across the nation welcome such projects and allow them to go ahead.
Mirvac’s latest update shows that BTR projects work – they have a 96% occupancy and a 7.4% rental growth rate at their LIV Indigo BTR in Sydney’s Olympic Park, with 14% of renters being retirees. These are impressive figures that should not be ignored.
Village operators constantly tell us they want to get into rentals – surely this is the time
