Build-to-Rent: The Future of Renting in New Zealand

As New Zealand grapples with a housing crisis, the urgent need for warm, dry, and healthy rental homes has prompted the property industry to kick-start the country's BTR sector, aiming to revolutionise the renting experience for Kiwis. In this article, we explore the concept of build-to-rent, its benefits, the driving factors behind its rise, and its future prospects in the New Zealand property market.

What is Build-to-Rent?
Build-to-rent is a property development model where investors or consortiums construct and own multiple rental units, leasing them to tenants as a long-term investment.

These homes are professionally managed, often featuring on-site management teams and exciting amenities like resident lounges, co-working spaces, gyms, and pools. Unlike traditional rental properties, BTR developments are purpose-built for renting, providing tenants with modern, convenient, and comfortable living spaces tailored to their needs.

The Benefits of Build-to-Rent for New Zealand Renters
In New Zealand, BTR developments offer renters high-quality homes that are professionally managed, ensuring prompt maintenance and top-notch customer service. Often these developments include amenities such as gyms, pools, and communal areas, contributing to an enhanced living experience. Additionally, BTR developments provide greater security and stability through longer lease terms, making them particularly appealing to those seeking a more permanent and luxurious living arrangement. This model not only expands housing options but also enriches the rental experience with long-term security and improved living standards.

The Benefits of Build-to-Rent for New Zealand Investors
For investors, BTR developments present a steady and reliable income stream. Located in high-demand areas, these properties offer the potential for long-term capital growth. The lower risk of vacancies or rental arrears in purpose-built rental properties, combined with professional management, makes BTR a secure and passive investment option. Investors can enjoy the benefits of a stable income without the day-to-day responsibilities of property management, freeing up time and resources for other pursuits.

The Rise of Build-to-Rent in the New Zealand Property Market
Build-to-rent is a new concept in New Zealand, but it has already seen significant growth overseas. In the United Kingdom, for example, BTR has been the fastest-growing source of new housing for nearly a decade, with annual supply increases of over 50%. Recognising the potential of BTR to address housing shortages, both major political parties in New Zealand have expressed support for the sector.

In March 2024, New Zealand's Minister for Housing, Hon. Chris Bishop, announced the government's commitment to making it easier for overseas investors to contribute to the BTR sector. Building on legislative progress under the previous government, the Overseas Investment (Build-to-Rent and Similar Rental Developments) Amendment Bill was introduced, proposing amendments to the Overseas Investment Act 2005. This bill aims to create a streamlined consent pathway, known as the 'large rental development test,' to facilitate overseas investment in BTR and similar developments. The bill is currently with the Select Committee for consideration, and its progress can be tracked on Parliament's website here.

The Future of Build-to-Rent in New Zealand
The future of BTR in New Zealand looks promising, with industry leaders and government support driving its growth. According to a 2021 study by the Property Council of New Zealand, with the right legislative levers, developers could build 25,000 BTR homes within the next 10 years. This growth is expected to address the urgent need for more rental homes and transform the way Kiwis think about renting.

If you're interested in tracking BTR developments across Aotearoa, the Property Council of New Zealand offers an interactive map to monitor progress, available here.

Conclusion
As build-to-rent picks up in New Zealand, it offers a fresh and practical option in the evolving housing market. Whether you are a renter seeking a secure, modern living space, or an investor looking for a low-risk, long-term investment, BTR developments are set to play an increasingly significant role in the future of New Zealand's housing market.

Look Book: New Zealand Build-to-Rent projects

30 Madden, Wynyard Quarter, Auckland

30 Madden is a pioneering BTR development located in Auckland's Wynyard Quarter, developed by Willis Bond & Co. This project features 90 high-quality apartments specifically designed for long-term rentals. It’s part of a larger mixed-use community that includes commercial spaces and public amenities.

Amenities:

• On-site management and concierge services
• Resident lounge and communal areas
• Rooftop terrace with views of the harbor
• Secure bike storage and car parking
• High-quality finishes and modern appliances

30 Madden has seen strong occupancy rates since its launch, with a high retention rate among tenants due to the quality of living spaces and the convenience of the location. The development has been praised for setting a new standard for rental housing in New Zealand.

The International, Princes Street, Auckland

The International, originally a luxury hotel, has been converted into a high-end BTR development by Sanctuary Group. Located in Auckland’s city centre, The International offers a unique BTR experience with luxury apartments available for long-term lease.

Amenities:

• 24/7 concierge and on-site management
• Heated swimming pool and sauna
• Resident-only cinema room
• Private dining rooms and wine storage
• State-of-the-art fitness centre

The International has seen success among affluent renters looking for a luxurious urban lifestyle. Its occupancy rates have remained high, with the quality of amenities and location being major draws for tenants.

The CAB, Auckland

The CAB is one of Auckland’s prominent BTR developments located in the heart of the city. Developed by Love & Co, this project involves the redevelopment of the former Civic Administration Building into 17 levels of high-end apartments available for long-term rent.

Amenities:

• On-site management and concierge services
• Resident lounge, theatre room, and library
• Rooftop terrace with stunning views
• Fitness centre and heated pool
• Secure parking and bike storage

The CAB has been successful in attracting renters looking for a premium living experience in Auckland’s central business district. High occupancy rates and positive tenant feedback highlight the project’s appeal and strong demand in the market.

Union Green, Auckland

Union Green, developed by Icon Group, is a mixed-use development in Auckland that includes a BTR component. This urban village offers a variety of apartment sizes, all designed with long-term renters in mind.

Amenities:

• On-site management and maintenance services
• Landscaped gardens and shared outdoor spaces
• Gym and wellness centre
• Secure parking and bike storage
• Pet-friendly policies

Union Green has achieved strong occupancy rates and positive tenant feedback, particularly for its green spaces and modern amenities. The development is popular among young professionals seeking a central, well-connected location.