The National Rental Affordability Scheme
Approved NRAS Properties
If interested in buying an NRAS approved property in Queensland or Northern Territory please fill out the following form:
| NRAS Queensland & Northern Territory (Qld & NT)
“The National Rental Affordability Scheme is an Australian Government initiative to stimulate the supply of up to 50 000 new affordable rental dwellings” Under the Scheme successful investors will be eligible to receive a National Rental Incentive for each approved dwelling, on the condition that they are rented to eligible low and middle income households at least 20 per cent below market rates.”
Simply, the government, pays a subsidy to the owner of an NRAS approved dwelling. In return, the Owner, of the unit must rent the unit out at 20% below market rent. There are rules that govern the types of properties, the locality, how they are built and who can live there.
Is it worth while?
Before we go into the why's and what for's of government policy, lets just see if its worth the trouble! The NRAS incentives are worth $9,524 per year ( CPI ADJUSTED ) paid regardless of the level of rent you receive. Guaranteed for 10 years.
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If your annual rental income is $20,000 and the tenant pays 20% below market value, then you give away $4,000 to the tenant, to receive $9,524 from the government.
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That’s right. You give the tenant a small discount and the government gives you a big incentive.
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In this example you are $5,524 per year better off !
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The annual incentive of $9,524 is TAX FREE
and is not assessable for Income Tax. |
The TAX FREE status of the incentive amplifies your investment returns. As you still receive all of your normal depreciation and investment allowances.
Why is the State and Federal Government Funding this Scheme?
There are two main policy objectives for the Federal Government
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The first, to Reduce the Massive Housing Shortage.
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The second goal, to Improve Rental Affordability.
NRAS will provide government incentives of $623m for 50,000 new affordable rental dwellings to be occupied between January 2009 and June 2012.
How does the incentive work?
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An incentive, in the form of a refundable tax offset of $9,524 /dwelling/ year for 10 years.
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The incentive, is paid to owners as a tax offset certificate at the end of each tax year. Both the Federal and State Governments contribute to the Tax Offset.
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The Tenancy Manager sends a letter of compliance to the Government stating that your property was rented out in accordance with the terms and conditions of NRAS.
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Then the Government, through the ATO, sends a tax offset certificate valued at $9,524 to you.
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This refundable tax offset either directly reduces tax you pay OR if you do not pay any tax is paid as a cash payment.
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THE INCENTIVE IS PAID ANNUALLY after you lodge your tax return and increases each year with rental CPI.
Income Demographic
Target Tenant The government has identified housing needs for different groups of the community.
These groups are categorized via income and wealth.
Those in the 40 to 100% section are not seen as requiring any assistance.
The Scheme is targeted at people whose wealth and income is between 20 and 40% of all Australians. It is a new sector called “Affordable Housing”. These are typically low to medium income earners.
"Social Housing" or "Housing Commission" is targeted at people who are at the lower end of the income demographic and typically earn the lowest in the community and would generally be on some form of social welfare. |
TARGET TENANT
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Typical Tenant Profile
Employed in the Local Area
These income earners consists of;
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Child Care workers
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Nurses
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Hairdressers
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Teachers
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Shop Assistants
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Hospitality
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Apprentices
Essentially any worker who is paying more than 30% of their income in rent is an eligible tenant |
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