Is this housing model an alternative to retirement homes?

There is a housing model on the market that is becoming increasingly popular with older Australians looking for an alternative to buying into a retirement home.

It’s build-to-rent and it’s taking off in Australia, with 7100 units alone either under construction or having passed planning controls in Melbourne.

According to the Australian Bureau of Statistics, about 30 per cent of Australians rent, and with the rising cost of housing that doesn’t look like it will change anytime soon.

But what is build-to-rent?

Build-to-rent developments are a model where the developers retain ownership of the development when it’s complete. The developer also usually manages and maintains the building, although sometimes that is contracted out.

It’s also called multi-family housing and is a relatively new model for Australia, but is well-established in Europe. It makes up nearly one-fifth of that market.

There are several pros and cons of the build-to-rent model.

The case for

In the build-to sell model, often developers sell the apartments as fast as they can and happily walk away. Unfortunately, just about all of us have heard of some horror story about poor construction and the new owners in legal limbo about fixing anything.

In built-to-rent, the developer owns the building so they are invested in making it appealing and, generally, the housing quality is higher.

Leases are also generally longer in build-to-rent as the owner wants a stable list of tenants without the hassle and expense of regular turnover.

Rules can also be more flexible, with tenants allowed to hang pictures or have pets.

In some developments, annual rents can be negotiated and locked in.

In the drive to make them more tempting, they often also have more amenities such as a gym or pool, rooftop dog parks, or even shared entertaining spaces.

Build-to-rent models often promote the ‘community’ nature of the developments, and shared amenities are part of that appeal.

And if you like the building, but your circumstances have changed, you can often just move to a more suitable apartment.

The case against

There is no getting around the fact that they are often more expensive. All those amenities and services come at a cost.

While longer leases appeal to some, for others they are a complete turn-off. Build-to-rent also often has break fees, so you could be locked into a lease for longer than you would like.

As it’s a relatively new model for Australia, the market is still working itself out. You will need to do your research and read the fine print before you decide if this is the model for you.

If you know someone living in such an arrangement, ask their opinion.

At the end of the day, you don’t own it. Australians love owning their own home and, despite all those amenities and attractive leasing options, renting is still renting. This may have implications for what you may be eligible for when you retire, especially since the principal dwelling is exempt from the assets test.

Are they more affordable?

There are some arguments that build-to-rent offers a more affordable model, but until there is more stock, the jury is out.

Dr Diaswati Mardiasmo, chief economist for PRD, told that like any development, build-to-rent usually targets a demographic.

“Some build-to-rents, for example, are predominantly aimed at students, so they don’t have the greatest finishes, whereas something like Piccolo House in South Melbourne is catering for very high-end tenants, someone who is happy to pay $800 a week rent,” she said.

There is a precedent for government to subsidise rents to make build-to-rent more affordable.

“Mirvac’s Newstead and Fraser’s project in Fortitude Valley will deliver a combined 240 (from a total of 750) apartments at discounted rent, subsidised by the state government. So, approximately 30 per cent of the stock is at a discounted rent,” Dr Mardiasmo said.

“That rent is ‘affordable’ in the sense that the rental price is discounted; it’s lower than the advertised rental price.”

However, generally build-to-rent is more expensive than the suburb’s median price.

“So even at a discounted rate, it’s still possible that build-to-rent pricing would be out of reach for certain demographics or for those requiring social housing,” Dr Mardiasmo said.

Does this housing model appeal to you? Would you consider renting over a retirement home? Why not share your opinion on the model in the comments section below?

Also read: What older Australians are buying and what they are cutting out

Jan Fisher
Jan Fisher
Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.


  1. I would like to propose an alternative housing model which I think would suit both young, new home owners and retirees. I’d call it the green and silver model.
    We started our home ownership in a 2/3 bedroom villa/townhouse which we bought in a small cluster. This would also be an ideal situation for us to retire into. These sorts of modest but modern, low maintenance homes would also be cheaper to buy than larger stand alone homes and so attractive to both young and old. If the cluster was big enough to support a small community centre, retirees could voluntarily help to mind children at low cost allowing young mums to work and in return the younger folk could help with a few jobs for the oldies. If the scale of the development allowed, a nurse on call or part time would suit you with children and elderly alike.
    I realise my thinking is very much influences by my Scandinavian cooperative exposure but I couldn’t see why it wouldn’t work here.

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