National Rental Affordability Scheme


On 3 March 2008 the Australian Government expanded the National Rental Affordability Scheme.

Initiatives of the scheme includes:

1. The National Rental Affordability Scheme will fund tax incentives for investors to build
up to 100,000 new affordable rental properties (in the form of $8000 tax offset)
2. The new target of 100,000 properties doubles the Government’s pre-election policy of 50,000 new affordable rental properties.
3. The Government will invest up to $30 million to streamline and move online, the approval of Development Applications.

The intention of the scheme is to increase the supply of affordable private rental housing for families and individuals across Australia. The Scheme will help to create a new class of investment in the housing market - one that attracts significant support from the Australian Government in the form of the National Rental Incentive, with additional support from State and Territory governments.

The National Rental Affordability Scheme provides a substantial financial incentive of a minimum of $8,000 value per dwelling annually to investors who rent approved dwellings at 20 per cent or more below current market rates, to low and moderate income households.

Benefits to investors:

Benefits to Investors Participation in the National Rental Affordability Scheme offers a number of benefits to investors in affordable residential rental properties.
a Improved Rental Yields
The minimum annual $8,000 National Rental Incentive for each approved rental dwelling can improve rental yields over conventional residential investment properties in certain markets.
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.
a Reduced Risk Profile - With rents set at 20 per cent below market value, and a large pool of eligible tenants, investors can expect a reduced vacancy risk.
a A New Asset Class - The Australian Government will allocate 50,000 incentives through the Scheme over four financial years. A further 50,000 incentives will be allocated from July 2012 if demand from investors and tenants remains strong.
a Linkages with other affordable housing initiatives - Potential investors and developers are encouraged to take full advantage of possible linkages with other affordable housing initiatives, including the Commonwealth Government's Housing Affordability Fund.
a Large and diverse pool of potential tenants - Up to 1.5 million individuals and families on low and moderate incomes will be eligible to be tenants in approved National Rental Affordability Scheme dwellings.
a Ethical Investment - Investing in affordable housing through the National Rental Affordability Scheme offers investment opportunities that may meet investors own criteria for building ethical investment portfolios.

Value to Investors:

Subject to compliance with the Scheme, each approved dwelling under the Scheme will attract an annual National Rental Incentive with a minimum value of $8,000, comprising:

a an Australian Government contribution of $6,000 (indexed) in the form of a refundable tax offset or a cash payments each year for 10 years; and
a a $2,000 (indexed) State/Territory contribution, which may be offered as cash or support in kind each year for 10 years

For more details visit the National Rental Affordability Scheme web site. Tax specific information can be obtained directly from the ATO (link to ATO).

For investors wanting to purchase a NRAS complient investment property, complete the above online enquiry form.

By David Maynard

CEO My Tax Zone

Copyright 2014. My Tax Zone.