7 minute read
Property
Tailwinds for Build-to-Rent sector
AUSTRALIA’S Build-to-Rent (BTR) however, off set lower supply scenarios with majority of activity in dense, urban development pipeline has surpassed and push dwelling undersupply in many locations like Melbourne and Sydney. a landmark threshold of 11,000 markets out to 2022 – rather than this Th e report reveals that there has been units – across more than 30 projects occurring earlier. a clear emphasis on scale and deliver– through a major acceleration of new “Build-to-Rent has a role to play in ing large institutional-grade product, projects. fi lling this market void, with the sector allowing owners to achieve operational
Th is is one of the key highlights in facing a perfect storm of ideal conditions,” effi ciencies through economies of scale, a recent CBRE report: Build-to-Rent Mr Martin-Henry continued. with an average size of over 350 units per Development Pipeline, which profi les “We expect to see developers BTR project. the sector’s supply and development in capitalise on the dynamics accelerating In another key takeaway, the yield gap Australia over the fi rst half of the year. structural shift s in demand drivers, such between commercial offi ce and residen
As the BTR asset class continues to as young, well-educated urban profestial has been narrowing – boosting the gain momentum in the Pacifi c market, sionals prioritising lifestyle aspirations relative att ractiveness of the asset class, the report credits a weakening of new Ben Martin-Henry. over home ownership (due to unaff ordgiven its innate defensive characteristics. residential supply across Australia, which ability) and thereby seeking to rent in “As a result, a growing number of was already in decline pre-COVID-19, market will tip back into an undersupply well-located, high-quality residential seasoned international institutional providing potential tailwinds for the situation from 2020 onwards for the fi rst developments.” investors are diversifying their portfolios sector over the next 12-24 months. time since 2014. CBRE’s Puian Mollaian, Associate Diinto the BTR sector and seeking exposure
In 2019, residential commencements CBRE Research’s Ben Martin-Henry rector of Structured Transactions & Advito this asset class in Australia, mirroring were circa 35% below 2018 levels, with said the impacts of a much lower rate of sory Services, said Build-to-Rent projects their substantial exposure across global CBRE Research estimating that the population growth from 2020-22 would, were being delivered across the country, holdings,” Mr Mollaian said.
AS a buyer-renovator, you need to you plan a quick sale for profi t once the have a budget that covers off the cost renovation is completed. of the property itself and funds for When choosing a house to renovate, renovations. establish whether the makeover will re
If you don’t do your numbers and only quire structural or cosmetic building work. have a vague renovation budget in mind, Most renovation rescuers will tell you you might fi nd yourself in over your head it’s typically best to steer clear of properfi nancially once you start the renovation ties that need expensive structural repairs, rescue. A good starting point when it comes which won’t provide signifi cant capital improvements to off set the cost of the BEFORE to choosing a property to renovate typicalrestoration. ly involves fi nding the worst house on the A bett er strategy is to seek out a propFor example, adding a new verandah is best street in a popular locale. erty with good fundamental bones, and more than a cosmetic restoration, and will
Revamping an ordinary property on that comes with bathrooms and kitchens be relatively costly. In contrast, it might be a pleasant road is usually a bett er strategy that won’t cost an arm or leg to bring up considered a cosmetic improvement if the than picking a smart home on less popular to date. By buying a fi xer-upper with no verandah fl oor only requires retiling. street and overcapitalising beyond the signifi cant issues, allows you to focus on Before buying a fi xer-upper, check neighbourhood’s prevailing standards. cosmetic renovations that visually update whether the local council’s planning depart
Avoiding overcapitalising is crucial if a property. ment has renovation restrictions in place.
Breaks in lenders mortgage insurance
CLOSE to half (48%) are saving more to buy in their desired area, and nearly three in every 10 fi rst home buyers are struggling to fi nd a property that suits their needs.
In response, Westpac-owned St George Bank has slashed its lenders mortgage insurance (LMI) charges to just $1 for qualifi ed fi rst home buyers borrowing up to 85% of the property value despite heightened economic uncertainty during the pandemic.
St. George General Manager, Ross Miller, said: “By reducing the expense of Lenders Mortgage Insurance, fi rst time purchasers may be able to aff ord a property that meets their needs sooner and save thousands of dollars.”
Th e St. George research found that one in every 10 Australians looking to buy a home are doing so for the fi rst time and that the COVID-19 pandemic has made one third of Australians want to save for that goal quicker.
Benefits available to upgraders too
In acknowledgement of the challenges shaped by the pandemic, a leading credit union has gone a step further by slashing LMI obligations for essential workers regardless of whether they are fi rst-time borrowers or not.
Th rough Community First’s Community Support Employees home loan off er, eligible, essential front-line workers such as nurses, fi refi ghters, police force employees, ambulance offi cers and teachers can borrow up to 90% of the value of a home without the need to pay LMI.
Protection for the lender, not the borrower
Lenders’ Mortgage Insurance, or LMI, is an insurance that protects the lender, not the borrower against a shortfall in the sale of the home and the outstanding loan amount should they default on a loan, explains John Tancevski, Chief Executive of Community First Credit Union.
AFTER
You might the local planning regulations either will not allow you to extend the property or build beyond a certain height.
Also, check whether it’s possible to remove trees from the property if that is part of your makeover plans.
From Raine and Horne.
“LMI is usually levied on a borrower if they take a loan of more than 80% of the home’s value.
“LMI is a one-off payment made by the borrower at the time of the loan sett lement, and this fee can add many thousands of dollars to the size of the mortgage.”
Generally, for a family home with a property value of $650,000 a buyer would also be looking at a one-off payment of more than $6,000 for the cost of LMI if they had less than a 20% deposit, according to numbers crunched by St George.
John concludes: “Our home loan off er is available to eligible vital essential services workers on owner-occupied properties and could save them many thousands of dollars
Empowering home owners to save energy
FINDING ways to save money and reduce household “Energy is very expensive especially as we all try to costs has never been so important, and a new online heat our homes at this time of year, but there are ways video series created by Penrith City Council aims to you can reduce your energy use, stay warm and save help residents to do just that. money,” Cr Fowler said. Th e video series titled Empowering Penrith covers “From switching off standby to installing solar powa range of useful and important topics to help residents er, the online videos are full of hints and tips to empower understand their energy use, reduce their energy conresidents to upskill and update themselves with the latest sumption at home and save money on energy bills. energy saving information and technologies. Th e seven short, informative and entertaining videos “Th e videos are short, entertaining and informative are co-produced by energy expert, Adam Corrigan from but most of all, they will show you that just a few small, Your Energy Friend and are available to view on Counsimple changes around the home can make a big diff er- cil’s YouTube channel and on Council’s website. ence to your bank balance, and to the environment, “ Cr Penrith Mayor Ross Fowler OAM said as we head Fowler said. into the middle of winter there’s small, simple changes that residents can make around the home to reduce their View the Empowering Penrith video series at youtube.com/penrithcityenergy consumption. council or for more information visit: penrith.city/empoweringpenrith 52 WESTERN SYDNEY BUSINESS ACCESS AUGUST 2020
