National Rental Affordability Scheme or NRAS was launched for the purpose of
providing assistance and funding to increase the supply of affordable rental
dwellings, reduce rental costs to low to mid income earners and to encourage
investment on a large scale to provide more affordable housing.
is expected to deliver up to 50,000 affordable rental homes by 2014.
the investor reduces the rent by 20% (may vary according to incentive provider)
of the market rent, the government will provide an incentive of $9,524 per
annum ($7,143 from Federal and $2,381 from the State governments). This payment
increases in line with CPI and in 2011 it is $9,524.
tenants are determined on an income basis with the service industries such as
police, teachers and nurses targeted as potential tenants.
incentives are TAX FREE which means on 41.5% MTR before tax = $13,675 and 31.5%
= $11,679. Reducing the rentals by 20% means negative gearing increases along
NRAS Is Not Social Housing
family can enter as a social housing tenant earning up to $58,292 whereas an
NRAS tenant can earn up to $125,960. NRAS is geared to key workers (service
industry), over 55's and families.
NRAS there is control with tenant selection. Advertising for tenants is as in
any other normal tenancy arrangement.
social housing there is no control over the rental rate charged- the government
subsidizes the rent and sets the amount, whereas with NRAS the rental rate is
set by the market rent and is valued by an independent valuer.
of NRAS for Investors
- Improved Rental Yields
- The minimum annual $9,524
National Rental Incentive for each rental dwelling will improve rental
yields over conventional residential investment properties.
- The national Rental
Incentive is income tax free, indexed to the rental component of the
Consumer Price Index (CPI) and is complemented by existing taxation
arrangements including depreciation.
- With rents at 20% below
market value and a large pool of eligible tenants, investors can expect
reduced vacancy risk.
- With rents at 20% below
market value investors can be more selective in their choice of tenant.
Certainty of contributions from the Australian and State governments for a
period of 10 years.
- Government Subsidized
- Secured Income Stream (10
- Cash Flow Positive
- Maintained and Managed
- $95,000 Plus Tax Credits
Over 10 Years
happens when the investor lodges their tax return?
A: When the property owner lodges their tax return the incentive
is used as a tax offset. This can reduce the overall tax payable or can be
received as cash refund if there is no tax debt for the year.
the Australian Government back the incentive?
A: Yes - The Australian Government is committed to paying the annual
NRAS incentive for approved dwellings.
determines the 20% discount rental rate?
A: Independent registered and qualified valuers. They determine
what the market rent is for years 1, 4 and 7. A 'desk top' valuation is used
for the other years. NB this works well in favour of the investor - it ensures
that they keep up to date with rental income as sometimes the landlord as
we know doesn't take steps or is afraid to lift rent in tight times.
Q: Can I
sell my NRAS property or remove it from the Scheme and rent it at market rates?
Q: Can I
buy more than one property?
Q: Can I
sell the property at any time?
A: Yes and the NRAS entitlements goes with the property on what
time is left of the 10 years.
Q: When do
the NRAS incentives begin?
A: When the tenant moves in and is pro-rated for the remainder of
the period until 30 April.
happens at the end of the 10 years?
A: You can sell or keep the property and the market rent returns
to the normal rent.
Q: What if
the consortium goes bankrupt?
A: You can apply to have your incentives managed by someone else.
Q. What Consortiums
Do You Deal With?
A: We deal with the NRAS approved participants who have simple
models that have no restrictions because NRAS was never meant to be
complicated! It should be like purchasing any other investment property, only
difference being that you receive $9524 per annum rising with CPI every year
for 10 years, in return for renting your property out for 20% below market
rent. To receive these benefits you must partner with an approved NRAS
participant to manage the scheme on your behalf for 10 years!
and work with the consortiums who have your interest as an investor as
80% of the rent
Can sell at anytime (no restrictions just like selling any other
Nil or minimal exit fees
Use Real Estate agents for managing the properties
For more information go to: