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 $11,168.56 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 the nras credit 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 | |
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