Discount for build-to-rent developments

Key information

A build-to-rent (BTR) development is one or more buildings that are constructed or substantially renovated for the purpose of providing multiple dwellings for rent under residential rental agreements.

BTR developments that meet certain requirements are eligible for BTR benefits for up to 30 years.

The BTR benefits include:

• land tax calculated at the reduced rate of 50% of the taxable value of the land
• an exemption from the absentee owner surcharge.

Development requirements

A BTR development is eligible if it provides at least 50 self-contained dwellings that are:

• fixed on the same parcel of land
• owned by one owner or co-owned by a unified ownership structure
• managed by a single entity (unless the dwellings provide affordable or social housing)
• become suitable for occupancy on or after 1 January 2021 and before 1 January 2032
• rented or genuinely offered for rent to the general public under residential rental agreements that meet the required rental terms.

The BTR benefits are available to new, large-scale developments. They do not apply to existing dwellings or small developments with less than 50 dwellings.

The BTR benefits only apply to the part of the land used for the BTR development, including facilities available to residents – not land used for other purposes, such as an office.

Land with a BTR development can be subdivided and continue to receive the BTR benefits, provided all the eligibility requirements continue to be met.

Property clearance certificates will show the BTR benefits that apply.

The BTR benefits do not affect the owner’s eligibility for other exemptions, like those relating to foreign purchaser additional duty and vacant residential land tax.

Parcel of land

This means any land owned by the same person that is:

• contiguous, or
• separated only by a road, railway or other similar area which is reasonably possible to move across or around.

Self-contained dwelling

This means a residence which has:

• a separate entrance
• all the amenities you need to live there, such as a kitchen, bedroom and toilet.

The amenities must be for the exclusive use of occupiers.

If you have to leave the dwelling to access these amenities, the dwelling is not self-contained.

Substantially renovated

This means a building which has been redeveloped from another use to provide BTR dwellings. For example, converting an office building into residential apartments.

This does not mean updating an existing residential building.

Ownership and management requirements

Unified ownership structure

A development must be owned under a single ownership structure. While there can be multiple owners, the co-owners must collectively own the whole BTR development in the same manner.

Change of ownership

The owners can change, so long as the unified ownership structure remains.

Managed by a single entity

Tenant leases, the common property and other facilities in the development must be managed by a single entity.

This can be:

• the owner(s) themselves, or
• a single management entity.

For example, a development has 50 dwellings. The owners manage 30 leases and outsource the other 20 to a management entity. The development is not managed by a single entity, so it’s not eligible for BTR benefits.

Occupancy and rental requirements

Suitable for occupancy

A dwelling is suitable for occupancy on the date it gets an occupancy permit. This is the occupancy date of that dwelling.

The occupancy date of a whole development is when at least 50 dwellings have got an occupancy permit.

Dwellings that received an occupancy permit before 1 January 2021 are not eligible.

Sometimes, a dwelling can’t be rented out due to a refurbishment or repairing damage. In this case, the Commissioner has the discretion to decide whether the break is reasonable. Long delays or major renovations are not considered reasonable.

Different occupancy dates

A development may have more than one occupancy date if it’s completed in stages. To be eligible for BTR benefits, at least 50 dwellings must meet the requirements for at least 15 years.

For example, a development that delivers 50 dwellings in 2025 and another 40 in 2026 will have a different occupancy date for the first 50 dwellings and the second 40 dwellings.

The 50 dwellings delivered in 2025 must meet the requirements until 2040 (15 years) to be eligible for the BTR benefits.

For the 40 dwellings delivered in 2026 to be eligible, those 40 – plus at least 10 dwellings delivered in 2025 – must meet the requirements until 2041. This is because at least 50 dwellings must meet the requirements for at least 15 years.

There is no limit on how many times a development can be expanded, as long as the eligibility requirements continue to be met.

Required rental terms

Different rules apply before and after 1 January 2026.

From 1 January 2026

A development must meet these 2 requirements:

1. Each dwelling must be rented or genuinely offered for rent under a residential rental agreement for a fixed term of at least 3 years (but a tenant may request a shorter period).
2. Each dwelling must not have any other restrictions except those needed to ensure public health and safety or to provide social affordable housing (e.g. dwellings cannot be restricted to students).

If a tenant requests a shorter period, both the tenant and the development owner must sign a declaration saying they were genuinely offered a fixed term of at least 3 years.

The owner does not have to send the declaration to us, but must be able to share it with us if we ask to see it.

Contact assessing@sro.vic.gov.au to request a copy of the approved form for the declaration. The declaration itself is made by the parties by completing the form.

If you can’t share the declaration with us, the Commissioner can use their discretion to determine the dwelling meets the required rental terms. This can occur when the owner has a history of genuinely offering long-term leases and has simply inadvertently breached the requirement to obtain or appropriately file the declaration.

Before 1 January 2026

A development must meet the 2 requirements above.

If an agreement entered into before 1 January 2026 meets these terms, the dwelling meets the required rental terms for the length of the agreement. No declaration is required.

Selling part of a development

An owner may sell part of a development – but the remaining land must continue to meet the requirements to be eligible for the discount.

BTR benefits period

BTR benefits are available for a period of up to 30 years. However, they are provided on the condition that the BTR development satisfies the eligibility requirements for a continuous period of at least 15 years from its occupancy date.

If the owners stop meeting the eligibility requirements during the 15-year period, BTR benefits cease and BTR special land tax applies.

If the owners stop meeting the criteria in year 16 onwards, BTR benefits cease – however, no BTR special land tax applies.    

The BTR benefits are not available during construction.

Notification if no longer eligible

If there is a change in circumstances that results in the land (or part of the land) that receives a BTR benefit no longer being eligible for a BTR benefit, the owner of the land:

• must notify us of the change in circumstance, within 30 days of the change
• If the change in circumstance occurs within the first 15 years, the owner will be liable for BTR special land tax to repay the benefits.

Failing to lodge a notification if a change in circumstance occurs is a notification default which can attract penalties.

BTR special land tax

If there is a change in circumstances that results in the land (or part of the land) that receives a BTR benefit no longer being eligible for a BTR benefit within its first 15 years, the owner of the land will be liable for BTR special land tax to repay the benefits.

The owner of the land when the development stops being eligible is liable. They will receive an assessment notice. The due date for payment of BTR special land tax is the due date set out in the notice of assessment.

There is a different rate for absentee owners.

BTR special land tax is calculated for each year the land received the BTR benefits, using the formula below. The total amount payable is the sum of the tax calculated for each year.

An owner of an eligible BTR development can sell the development without resulting in BTR special land tax. However, the new owner assumes the obligation to complete the 15-year eligibility period. If they fail to do so, the new owner is liable to pay BTR special land tax for the whole period – including the period under previous ownership – that the land enjoyed BTR benefits. 

Special land tax for each year = (T×BR)×(1+IRt)^yd+1-t

where:

• T = the taxable value of the land in the relevant year.
• BR = the BTR benefit rate in the year the land stops being eligible:

• IR = the applicable interest rate for the relevant year. This is the sum of the bond yield for January in the relevant year plus the corporate bond spread as at 31 December of the prior year. 
• yd = the number of tax years the land was eligible for the discount (applied on 1 January each year).
• t = the number of tax years, from the first year of eligibility until the last year.

Apply for this concession

Contact us to request a concession with the following information:

• Customer number.
• Property address.
• Occupancy permit(s).
• Confirmation that the development is owned under a single ownership structure and managed by a single management entity.
• A copy of the lease template or lease agreement (confirming there are no rental restrictions, and the minimum lease term genuinely offered is 3 years).