NRAS - What is it and how does it work?
23/10/2015 Lauren Wilden-Ross, Senior Property Portfolio Manager
The National Rental Affordability Scheme (NRAS) was introduced by the Federal Government in 2008 as a way of creating affordable housing and stimulating the building industry. The incentive was to supply new properties in Australia that would be leased at 20% under the market rate to-low to moderate income earners.
As an owner of a NRAS dwelling, the property must be brand new or not have been lived in before in order to qualify for the NRAS dwelling ID.
To qualify as an NRAS tenant, the household must meet a gross income limit. For 2015/16, a single tenant would have to earn $47,904 or less to be able to participate in the scheme.
The investor, although receiving 20% less market rent for their property, receives a healthy annual tax free incentive (indexed annually) from the government for being involved in the initiative. The incentive for 2015/16 is made up of $8,187.78 (Federal Government contribution) and $2,729.26 (State Government contribution). Although NRAS property management costs are slightly higher, the investor is not charged re-leasing or advertising charges over the term of the NRAS agreement.
The incentive is paid for 10 years whilst the property is still operating under NRAS, unless at any stage the investor decides to owner occupy the property or remove the NRAS dwelling ID attached to the property at any time.
As a property manager at The Hopkins Group, it has been interesting to see the calibre of tenants who apply for properties within the scheme. Open for inspections are conducted as normal and there is a general pre-screening of the applicant done in the office whilst income declaring documents are completed and reviewed by the housing provider.
Having leased over 60 NRAS properties, the application process for NRAS tenants can be quite lengthy, given there is a large amount of accompanying paperwork that is required, including obtaining tenant bank statements, NOA’s, payslips etc. Given the work involved from both the property manager and the tenant, I’ve found that tenants who have successfully applied for an NRAS property are very appreciative of securing a tenancy and generally become good tenants, given the incentives in place for them to remain in the property and work involved to get approved.
If you are a landlord or tenant interested in NRAS, or would like to speak with someone with relation to any NRAS enquiry, please feel free to call our office on 1300 726 082 and ask to speak with a property investment adviser or property manager who will be able to assist.
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