What is NRAS?

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NRAS is short for the National Rental Affordability Scheme and was legislated by the Australian Government in 2008. NRAS was launched for the purpose of providing an increase supply of quality housing at reduce rents to low and mid income earners, such as nurses, social care workers, teachers and students. There is an ever increasing shortage of housing in Australia and this incentive is designed to help alleviate the crisis by encouraging investment.

NRAS homes are not social housing — they are affordable private rental homes

How does it work?

When an investor purchases a property with an NRAS credit they provide a discount of a minimum 20% on the market rent to eligible tenants. In exchange, the Government will provide the investor with a tax free  incentive paid annually. The current incentive is $10,661 p.a , and increases with CPI every year for 10 years. This can result in over $100,000 in tax free incentives over 10 years

What are the benefits for the investor?

  • Improved Rental Yields
  • The certainty of  $10,917 p.a indexed every years for 10 years that will result  in  improved rental yields over conventional residential investment properties
  • The national Rental Incentive is  tax free, indexed to  Consumer Price Index (CPI)
  • You still have full title and choice of tenant
  • You are still entitled to all existing taxation benefits  including depreciation
  • Potential  reduced vacancy rates due to lower rental costs to tenants
  • A potentially true cash flow positive investment

Who is the eligible to rent an NRAS property?

NRAS dwellings must be rented to eligible tenants who meet the NRAS income level requirements, which are based on the tenant’s gross income.  The government has estimated that approx 1.5 million Australian household are eligible. Tenants must prove their salaries before applying to rent an NRAS property. Maximum  income levels ensure investors have a  large tenant selection plus allow for a 25% increase  above the initial income level. Current income levels for eligible tenants are

Household Type Initial income limit $ per annum
1 Adult $47,289
2 Adults $65,378
3 Adults $101,555
Sole parent with 1 child $65,423
Sole parent with 2 children $81,108
Sold parent with 3 children $96,793
Couple with 1 child $81,063
Couple with 2 children $96,748
Couple with 3 children $112,433

 

NRAS Price increases Since 2008

Rents Component – Weighted average of eight capital cities – 3.7% increase in 2013-2014  
Contributed by Amount
Australian Government Contribution $7,763.00
State/Territory Contribution $2,587.00
Total $10,350.00
Rents Component – Weighted average of eight capital cities – 4.8% increase in 2012-2013  
Contributed by Amount
Australian Government Contribution $7,486.00
State/Territory Contribution $2,495.00
Total $9,981.00

 

Rents Component – Weighted average of eight capital cities – 4.2% Increase in 2011-2012  
Contributed by Amount
Australian Government Contribution $7,143.00
State/Territory Contribution $2,381.00
Total $9,524.0
Rents Component – Weighted average of eight capital cities – 5.4% Increase in 2010-2011  
Contributed by Amount
Australian Government Contribution $6,855.00
State/Territory Contribution $2,285.00
Total $9,140.00

 

Rents Component – Weighted average of eight capital cities – 8.4% Increase in 2009-2010  
Contributed by Amount
Australian Government Contribution $6,504.00
State/Territory Contribution $2,168.00
Total $8,672.00
Rents Component – Base rate in 2008-2009  
Contributed by Amount
Australian Government Contribution $6,000.00
State/Territory Contribution $2,000.00
Total $8,000.00

Latest information

https://www.dss.gov.au/our-responsibilities/housing-support/programmes-services/national-rental-affordability-scheme