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It’s payback time

A fresh build-to-rent model is breaking new ground by seeing proceeds returned to regular Kiwis, writes Joanna Mathers.

By: Joanna Mathers

27 June 2023

Oranga Apartments in Onehunga are one of the early examples of Simplicity Living’s developments.

The build-to-rent segment is still in its infancy in New Zealand. The overseas model of BTI takes the ownership of investment property out of the hands of private investors and into the hands of real estate investment trusts (REITs).

These are companies that develop and operate long-term property investments. Private investors can buy shares in the developed portfolios, and tenancies are managed in-house. In places like Germany, it’s mainstream.

But in late 2021, a new build-to-rent model was announced in NZ, one that sees the proceeds go back to regular Kiwis.

Shane Brealey (along with wife Anna) is the owner of NZ Living, the country’s largest KiwiBuild company. The company has created 700 new houses for first time home buyers but, as he explains, “I was tired of people turning up to these affordable homes in Teslas, and selling them on for a 20 per cent profit a few years later.”

So, he hatched a bold plan – the transformation of NZ’s housing market.

Along with Sam Stubbs (well-known paradigm disrupter and founder of the non-profit Simplicity KiwiSaver fund) Simplicity Living was developed. The entity creates lower-than-market-rent prices for long-term rentals, backed by Simplicity’s KiwiSaver fund. And the rental income generated goes straight back to the fund.

Efficient model

“We want people to view these rentals as a home for life,” says Brealey. “These are going to be stable communities of people who live in the same home for generations.”

As Brealey explains NZ Living had long focused on construction efficiencies, developing a “kaizen” system, based on the Toyota model, which emphasises the constant analysis and improvements of all aspects of development. In his years as a developer he came to realise the tendering model led to extreme inefficiencies and confusion. Litigation and bank fees added to the spiralling costs, which was borne by the people buying the homes.

Through deep analysis and identification of issues at each stage of the process (and by keeping everything in-house and using the same contractors every time) the company has been able to keep costs far lower than other developers.

“The system is simple and we have achieved significant productivity gains,” says Brealey. “In the past five years construction costs have gone up 40-45 per cent; we’ve only seen an increase of 3 per cent per annum.

“It’s all about standardisation. Normally, a developer will use a raft of architects and builders, plus numerous other subcontractors, for a new development. With Simplicity Living every aspect is conducted in-house and repeated in future builds.

Kupenga Apartments in Pt England are already built and tenanted.
Another large-scale development is located in Mt Albert and will be ready for tenancy in mid-2024.


“We have standardised window sizes, ranch sliders and appliances. Our design and development teams are integrated; and we use the same contractors for every build. If we find an inefficiency, we fix it and move on. We’re not constantly firefighting.”

Now with the backing of Simplicity KiwiSaver fund, Simplicity Living has also cut the costs associated with banks, which are significant. The savings are around 30-35 per cent, he says, resulting in a significant decrease for the end user – the renter.

It’s a completely different model of development than we’ve seen before in NZ, and Brealey says its possibly unique in the world. Simplicity is able to provide funding for the development and Brealey has the years on the ground (he’s worked in building and development for 35 years).

They are hoping to build at such a scale that it changes the rental market.

There are already hundreds of homes built and planned across Auckland, with homes in Pt England and Onehunga already rented out. And they have plans for up to 15,000 in the next decade or so. Brealey hopes that once a significant amount of these homes have been built the lower rents that result will help drive down rental costs around the country.

It’s a new way of looking at property development; something done for wider societal good rather than for profit.

“With a super fund owning the houses, we are able to give the proceeds back to members,” says Brealey.

Giving back

And he says that rather than taking too much notice of the doom and gloom stories surrounding property (“the press and politics is hugely distracting”) he feels there is more to be gained by focusing “on our own game”.

“My family has done well out of development, and we have 10 years ahead of us to continue working. We want to give back to the country we love; so we have gifted our work to Simplicity Living for the next decade.

“It’s so great to get up in the morning knowing we are creating quality affordable rentals for those in the middle, who are unable to afford their own homes, but aren’t entitled to government-funded accommodation.”


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