Granted, major property companies like Mirvac and Lendlease make public statements about ‘looking into’ increasing housing supply through build-to-rent. But the reality is that there is a viability gap. Build-to-rent does not stack up financially in Australia.

This was confirmed by Colleen Pentland- Lally, Director of Capital Markets for CBRE in the US when she stated that Australian super funds have invested several billion dollars in America’s well established multifamily rental housing system, helping to make America great again. Why in the US and not here? Because it’s not economically viable to invest in multi-family rental housing in Australia. Over decades, governments (both Labor and Liberal) have created and maintained a financial system that does not allow institutional funds to achieve a reasonable after-tax return on building and holding rental housing in Australia.

We need to close this viability gap. We need a new rental affordability scheme specifically targeting institutional funds that will create a residential rental investment class to suit people on a diverse range of incomes. To be more specific, the build-to-rent housing sector must be ‘salt and peppered’ with social and affordable housing. Governments have allowed our social and affordable housing to dwindle 3.5% of our national housing stock. This trend must be significantly reversed.

Key workers, such as firefighters, nurses, teachers and police officers, need affordable housing in areas where society needs their services. Social housing must be located where tenants have ready access to existing infrastructure, services and jobs. This makes rational business sense and will result in billions of dollars in long-term operational savings and productivity benefits. Most importantly, it will enable more Australians to live better, healthier, happier lives.

It will take investment of more than $100 billion to overcome the estimated national shortfall of at least 200,000 dwellings in affordable and social housing. Given the sums involved, our government needs to attract private capital to be part of the solution. To do that, it must accept that private capital will need to achieve market returns (relative to the risks).