“PBSA should be included in housing policy because we are part of the housing solution,” says PBSA pioneer Craig Carracher as he takes aim at a government approach that ignores a key piece of the housing puzzle. The student accommodation mogul, who built from scratch a living-sector empire with $8 billion in assets under management, says radical policy reform is needed, arguing that red tape is strangling housing supply when Australia desperately needs more accommodation. Carracher co-founded Scape Australia in 2013 with Stephen Gaitanos, transforming it from “two guys out the back of a mining company’s office” into Australia’s largest student accommodation operator. Scape manages 20,000 student beds across 39 sites, and another 6000 beds are under construction. Most recently, the company completed Australia’s largest direct real estate transaction, acquiring seniors living operator Aveo for $3.85 billion. Suffice it to say, Carracher is uniquely positioned to speak across multiple accommodation sectors. At The Urban Developer PBSA Summit on August 14, Carracher said the current housing policy missed the point on how to solve Australia’s accommodation crisis, or PBSA’s role in tackling the National Housing Accord’s 1.2 million homes target. His criticism starts with the inappropriate use of residential building regulations for commercial student accommodation developments. “Why does the same red tape apply to a build-to-sell versus build-to-hold property?” Carracher says. “When you’re building to hold a property as an investment with professional management, why does the same red tape apply as to someone buying off-the-plan for personal residence? “I don’t understand that.” ▲ Craig Carracher speaking at The Urban Developer Purpose-Built Student Accommodation Summit in Melbourne. Federal housing minister Clare O’Neil appears to side with Carracher, telling media that “we have a crazy amount of regulation standing in the path of builders and developers today that is serving no purpose other than to delay and create more expensive housing bills for us”. Carracher wants PBSA projects counted and regulated under the Housing Accord. He argues that Australia has a housing diversity problem stemming from over-reliance on build-to-sell models that worked in the 20th century but fail to address modern accommodation needs. “The problem in Australia is that we’ve really only got built-to-sell,” he says. “The strata concept is great for getting mums and dads to deploy capital in a stratified world but there’s no diversity beyond that.” According to Treasury documents, the Australian Bureau of Statistics does not include PBSA in its standard housing data—it would require manual addition to existing data series. This creates administrative complexity that Treasury warns could set precedent for counting other accommodation types (such as aged-care facilities and hotels) towards housing targets. This “may be criticised by stakeholders as changing the rules to make it easier to meet targets without delivering more dwellings that people could live in permanently”, it said “[But the] Government needs to recognise that housing diversity is the solution, not the problem,” Carracher says. Unlike students renting private homes, PBSA residents occupy accommodation specifically designed for their needs, freeing up stock in the broader rental market. CBRE data shows there’s a significant undersupply of beds with unmet demand of 15,000 to 20,000 beds in Melbourne and 25,000 to 30,000 in Sydney. ▲ Rendering of Scape’s purpose-built student accommodation project at Kingsford, Sydney. Treasury estimates just 12,000 new beds will be delivered nationally during the entire Accord period. Lifting regulatory constraints could help PBSA providers meet the market demand for student accommodation, easing the burden on private housing and students seeking accommodation in build-to-rent developments, Carracher says. He says build-to-rent developments should be mandated to include only 30 per cent students, but it’s “often around 50 to 60 per cent”, which is “bad for BtR, bad for operators, and bad for students”. He’s also highly critical of foreign surcharge taxes, framing of foreign investment and the narrative around international students, which he says “is unconscionable, wrong, mischievous, designed to deceive people” and, in the case of former Liberal leader Peter Dutton’s policy taken to the latest federal election “the act of a desperate person with no supply solutions”. There are also government concerns about including PBSA in housing targets that go beyond regulatory complexity. A Treasury ministerial submission reveals concerns about “taking construction workforce away from build-to-rent and build-to-sell housing supply” should PBSA projects accelerate. Carracher sees this as an opportunity, saying Australia should leverage “the best international education sector in the world” to train construction and development workers needed for housing delivery across all sectors. ▲ Rendering of Lendlease’s and Scape’s towers at Gurrowa Place near the Queen Victoria Markets in Melbourne’s CBD. His recommendations also include streamlined approvals, modern tenancy laws that reflect professionally managed buildings, stable migration and education policy frameworks. “We need housing diversity and investment for the long term,” Carracher says. “I think these are simple things the government could address.” The PBSA sector’s pandemic response showed its potential for co-ordinated policy advocacy. When the government threatened to shut down student accommodation during the pandemic, providers united to protect their operations and students. “It was really the first time we had operated as a unified industry, and I think that brought better outcomes for students overall,” Carracher says. As Treasury currently examines PBSA’s role in the National Housing Accord and industry confidence returns post-election, the timing may be right for another co-ordinated push. “For the first time in 40 years—since the post-war boom—there’s been real investment in this space,” Carracher says. “There have been tactical incentives but there hasn’t been a strategic approach. I think there’s definitely a role for PBSA in addressing housing diversity in Australian cities.”
