Build-to-Rent

What You Need to Know

Build-to-Rent (BTR) projects are designed for long-term rental, rather than individual sale. Because of this, they usually require a different finance structure to standard residential lending. Lenders may consider the project's scale, rental income potential, location, construction costs, and long-term viability. These projects may include apartment buildings, townhouse developments, or other purpose-built rental communities.

Key Finance Considerations for Build-to-Rent

• Loan Structure

  BTR projects may be funded through commercial, development or investment lending, depending on the project's scale and purpose.

• Rental Income and Servicing

  Lenders may assess projected rental income, rental appraisals, occupancy assumptions, and the project's long-term ability to service the debt.

• Pre-Sale Requirements

  Unlike traditional build-to-sell developments, BTR projects may have less reliance on pre-sales because the properties are intended to be held for rental income. However, requirements can vary depending on the lender and the overall project structure.

Application Requirements for BTR Finance

• Applicant and Developer Experience

  Lenders may review the applicant's development background, the builder's track record, and the project team's ability to manage and complete the development.

• Project Information and Documentation

  Applicants may need to provide key project documents, such as: - Resource consent and building consent approvals - Earthworks, planning, and environmental compliance information - Detailed costings and a fixed-price building contract - Registered valuation or project feasibility assessment - Expected rental income and occupancy assumptions