Build to Rent


Build to Rent - Implications for Planning





Build to Rent – Implications for Planning

Build to rent (BTR) can take many forms, from luxury apartments to affordable housing options. Whilst mostly known in Australia for being a financial or land tenure model, you would be forgiven for asking: why is this a planning issue?

Build to Rent – Implications for Planning

What are the implications?

For middle to upper range projects, substantial planning issues won’t arise: apartments are designed and constructed to place greater emphasis on long-term sustainability and maintenance though without seeking to compromise on space both inside and out. While this is a great outcome in terms of its ability to diminish our collective carbon footprint and provide alternative housing options, it may hardly seem like planning news.

However, there can be significant planning issues for the BTR model when dealing with housing options that are targeted at providing affordability. This is especially the case when dwelling size is a key factor in the housing affordability matrix and our current planning codes that govern apartments ‒ such as BADS ‒ focus on stipulating minimum room dimensions.

Whilst the approach of BADS is a reasonable reaction to the rash of small, studio-style apartments that flooded the Melbourne housing market a decade ago, is this statutory framework appropriate for the shared living focus that affordable BTR models itself on?


The current planning system

The planning system in Victoria has traditionally focussed on providing residential amenities in the private domain. This is where our planning codes and policies have typically focussed on rooms sizes (Clause 58.07-1) and balcony sizes (Clause 58.05-3) as part of the answer to protecting the amenity of future inhabitants.

In recent years, we have seen some attention paid to communal spaces, such as the provision of 250 sqm of communal space or 2.5 sqm per dwelling ‒ whichever is the lesser ‒ at Clause 58.03-2, for apartment developments over 40 dwellings. However, this approach has focussed on communal external spaces and given little, if any, acknowledgement of the role of communal internal spaces, such as dining areas, kitchen facilities and resident lounges.

Shared or public experiences are increasingly common in the European housing market but the Victorian planning system is not well set up for a housing model that encompasses a mixture of private and shared spaces, let alone one that this predominantly communal. Where an apartment building is situated in this ownership framework ‒ from private through to public ‒ physically impacts apartment design and, accordingly, how it can be assessed in the Victorian planning system.

We have seen an increase in the provision of communal facilities in larger apartment complexes in recent times. Driven by the market, amenities including swimming pools, gymnasiums and media rooms are an extension of the overall offering of an apartment complex. These facilities enhance a resident’s convenience and comfort, whilst typically increasing the price point and/ or marketability of the product.

Our review of 10 large post-BADS apartment approvals showed that the level of communal spaces averaged 3sqm of communal space for every apartment. Typically, apartments with more communal facilities were at the higher end of the market and those with less were typically mid-range. In every instance, apartments were compliant with BADS when it came to apartment sizes.

But what happens when the communal living concept is applied to affordable housing? The idea is to increase the supply of communal facilities in a building while enabling a reasonable reduction in the size of apartments to provide affordable options.

How does the planning system cope?


What are the planning issues for the affordable BTR model?

A reduction in apartment sizes is the most obvious planning consequence of reducing housing prices. In the affordable BTR model, this can mean the return of the studio-style apartment, where small kitchenettes and integrated living and sleeping areas, typify the layout. With sizes of around 30-35 sqm, these fall short of the requirements of BADS.

However, such buildings typically also come with substantially greater communal facilities, around 50% greater than the market average and sitting at 4.7-4.9 sqm per apartment. Such spaces focus on providing a range of facilities, from gymnasiums, communal dining and kitchen, club space and of course, outdoor terraces and cinemas/ bars.

These buildings would not comply with BADS but under any common-sense assessment, provide acceptable levels of amenity for residents.

In addition, such a building needs to reasonably be defined as a ‘Residential Building’ given that the land will remain in one ownership and a flexible approach to an assessment under BADS is required.

The challenge is that not all Councils are likely to be flexible in their approach so, ideally, better recognition of the shared living model needs to be acknowledged in the planning scheme.


What changes need to occur?

The primary change that needs to occur is either modification to BADS or an alternative code for the assessment of shared living models of housing. Such changes need to give credence to the provision of communal facilities allowing an offset in other private amenities.

For example, in NSW, State Environmental Planning Policy Amendment (Build-to-rent Housing) 2021 provides to support the flexible application of the NSW Apartment Design Guide and requires the consideration of amenity provided by common spaces and shared facilities in determining the appropriateness of a proposal.

The definition of Residential Building could also be expanded to more clearly reference BTR, providing planners and developers with more certainty around how this mode of housing should be considered and the limitations around subdivision into the future.

To varying degrees, the shared living model in the form of formal student housing is already recognised by the planning scheme. Given the extensive consideration given by the City of Melbourne’s policy (Clause 22.24) to the trade-off between private and shared spaces, such an approach can comfortably be translated into a communal or shared housing model for non-students.