Executive Summary
- A ‘build-to-rent-to-own’ model has been proposed to allow renters to buy shares in their building’s corporate entity without a traditional mortgage.
- The system is designed to help moderate-income households, essential workers, and others struggling to enter the property market build equity.
- The model leverages Australia’s growing build-to-rent sector, which has nearly 40,000 apartments in the development pipeline.
- Implementation would involve national guidelines and pilot programs, operating within existing financial and legislative frameworks.
Amid record-low housing affordability, a new research report proposes a “build-to-rent-to-own” model designed to help renters establish a financial stake in the housing market. The model would allow residents to purchase shares in their building’s corporate entity, bypassing the need for a traditional deposit or bank loan and creating a pathway to home equity for those currently priced out of the market.
How the Model Works
Under the proposed framework, residents in a build-to-rent development could purchase ownership shares in the corporate entity that owns the property, potentially starting with weekly contributions as low as A$10. This approach differs from standard homeownership, as participants would own shares rather than a property title. These shares, valued quarterly, could be sold back to the entity or passed on as inheritance to family members wishing to live in the development.
Participants would receive dividends from their shares, which could be used to offset rent or acquire more equity. The report distinguishes this concept from typical “rent-to-buy” schemes, where a renter eventually purchases their unit with a conventional mortgage. Instead, this model is more akin to limited equity housing cooperatives found in Northern Europe, offering a long-term, stable housing option with the benefit of equity growth.
A Growing Sector
The proposal arrives as the build-to-rent sector gains traction in Australia, supported by new government legislation and tax incentives. While currently representing a small fraction of the housing market at 0.2%, or about 23,000 apartments, the sector is expanding rapidly. There are approximately 39,300 apartments, valued at around A$30 billion, in the development pipeline nationwide, presenting a significant opportunity to pilot this new ownership model.
Potential Beneficiaries
The research identifies several groups who could benefit from a build-to-rent-to-own system. These include moderate-income households and essential workers struggling with housing costs, younger individuals without access to family financial support, and older non-homeowners preparing for retirement. The model could also provide stable housing and downsizing options in regional communities where access to home loans is often limited. Developers and investors may also benefit from lower tenant turnover costs, as residents would have a long-term stake in the property.
Path to Implementation
According to the researchers, the model could be implemented within existing federal build-to-rent legislation and financial market guidelines without requiring significant legal changes. The report recommends establishing common national guidelines, launching pilot programs in both urban and regional areas to refine the process, and forming a working group to oversee its development across Australia. This collaborative effort between governments, investors, and housing providers could offer a new solution for housing accessibility.
