NRAS Information For Investors - Click Here

Background of NRAS

The 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.

NRAS is expected to deliver up to 50,000 affordable rental homes by 2014.

If 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.

Eligible tenants are determined on an income basis with the service industries such as police, teachers and nurses targeted as potential tenants.

The 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 benefits.

Why NRAS Is Not Social Housing

A 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.

With NRAS there is control with tenant selection. Advertising for tenants is as in any other normal tenancy arrangement.

With 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. 

Benefits 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.

Reduced Risk Profile

• 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.

Further Benefits

• Government Subsidized Property Investment
• Secured Income Stream (10 Years)
• Cash Flow Positive Investment 
• Maintained and Managed
• $95,000 Plus Tax Credits Over 10 Years

FAQ's

Q: What 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.
 

Q: Does the Australian Government back the incentive?
A: Yes - The Australian Government is committed to paying the annual NRAS incentive for approved dwellings.
 

Q: Who 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?
A: Yes
 

Q: Can I buy more than one property? 
A: Yes
 

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.
 

Q: What 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!

We trust and work with the consortiums who have your interest as an investor as priority!

They offer...

·         80% of the rent

·         Can sell at anytime (no restrictions just like selling any other property)

·         Nil or minimal exit fees