| With rent increases outstripping wages growth | | | | What are the benefits to Investors? |
| and inflation, it is becoming increasingly difficult for | | | | The scheme provides a Commonwealth incentive |
| low to middle income earners to enter the private | | | | of $6,000 along with a state incentive of $2,000 |
| rental market. To address this problem, the | | | | for eligible purchases. With rebates valid every |
| federal government has launched the National | | | | year for 10 years, there is a potential $80,000 in |
| Rental Affordability Scheme (NRAS), for the | | | | tax credits available to investors and developers. |
| purpose of providing assistance and funding to | | | | Target rental groups are professions which are |
| increase the supply of affordable rental dwellings. | | | | 'essential' to the community, including police, |
| The scheme aims to provide more affordable | | | | fire-fighters, teachers and nurses. |
| housing, by offering generous incentives for | | | | Other benefits include:o Improved Rental yields |
| investors, developers and not-for-profit groups | | | | -receive a minimum $8000 incentive for each |
| who participate and offer rental properties at | | | | approve dwelling - tax free)o Reduced Risk Profile |
| 20% below the current market rate. The scheme | | | | -with rental rates at 20% below market value, |
| reduces rental cost for low and middle income | | | | demand will be very high, resulting in reduced |
| earners, whilst encouraging large scale investment | | | | vacancy risko Linkages with other affordable |
| to provide affordable housing. | | | | housing initiatives |
| The two primary reasons for the implementation | | | | -It is encouraged that potential investors take full |
| of the NRAS are: | | | | advantage of other affordable housing initiativeso |
| 1. To increase the supply of new rental housing | | | | Ethical Investment |
| directly into the housing market | | | | What payments will I receive? |
| 2. To improve affordability for the eligible target | | | | Payments to approved applicants include: |
| groups | | | | - A tax free incentive of $8,672 per dwelling/year |
| By offering substantial investment benefits, the | | | | for 10 years. |
| scheme aims to assist institutional investors, | | | | - Payment to be made as a $6,504 tax rebate in |
| developers and not for profit groups to deliver | | | | July, and $2,168 cash in September |
| 50,000 rental dwellings over the next two financial | | | | How long should you be a part of the NRAS? |
| years, and a further 50,000 post 2012. | | | | Investors, developers and not-for-profit groups |
| The introduction of the scheme has opened up a | | | | that apply and receive the NRAS incentive must |
| substantial new investment opportunity within | | | | be prepared to remain in the scheme for a |
| Australia. The NRAS Scheme will provide 'tax free | | | | minimum of 10 years. If selling within the 10 year |
| incentives' of $623m for 50,000 new affordable | | | | period, provisions must be made for the |
| rental dwellings to be occupied between January | | | | properties to remain on the scheme, or to replace |
| 2009 and June 2012, with provisions for a further | | | | them with similar properties in the same area. |
| 50,000 incentives after 2010 if demand remains | | | | Penalties apply for early termination of the |
| strong. | | | | scheme. |