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National Rental Affordability Scheme (NRAS)

What Is It?

The NRAS is a long-term commitment by the Australian Government to investors prepared to build affordable rental housing. It seeks to address the shortage of affordable rental housing by offering tax-free financial incentives to the business sector and community organisations to build and rent dwellings to low and moderate income households at below-market rates for 10 years. It aims to:

  • Increase the supply of affordable rental housing.

  • Reduce rental costs for low to moderate income households.

  • Encourage large-scale investment and innovative management of affordable housing.

How Does It Work?

NRAS provides a substantial annual tax-free incentive, called the NRAS Incentive, to the business sector and community organisations who build and rent dwellings to low and moderate income households at a rate that is a least 20% below the prevailing market rate. 

The annual income-tax free Incentive is currently $9,981 per dwelling, and is indexed each year to the rental component of the CPI. The Incentive comprises of:

  • An Australian Government contribution of $7,486 per dwelling per year.

  • A State or Territory Government contribution of $2,495 per dwelling per year.

NRAS Dwelling Eligibility Criteria

NRAS dwellings must:

  • Be brand new - it must not have been previously tenanted in its current condition.

  • Be rented at a rate that is at least 20% below the prevailing market rate.

  • Be self contained - It must be demonstrated that a tenant, or tenants, would be able to live independently within the dwelling and not need to access external or common facilities.

  • Provide the following facilities:

    • A bathroom and kitchen

    • A bedroom and living space (the bedroom and living space may be combined within a single large room, as in the case of studio apartments)

    • A separate lockable entrance which can be accessed either externally or via an internal hallway or common entrance. The entrance cannot be accessible only via entry to another dwelling.

  • Provide private facilities.

  • Not include a caravan, houseboat or other kind of mobile dwelling.

What's In It For Investors?

The NRAS is a private investment scheme targeted at large-scale investors seeking improved returns on their direct property investment.
It provides a substantial annual tax-free incentive per dwelling to investors who build and rent approved dwellings at a rate that is a least 20% below the prevailing market rate, to low and moderate income households.
Approved NRAS investors will be eligible for tax-free incentives not available to conventional, individual residential property investors, with each approved dwelling attracting an annual NRAS Incentive for up to 10 years.

How do I become an investor?

An investor may be involved in the Scheme as an investor by:

  • purchasing properties from approved participants as an individual or as part of a consortium arrangement; or

  • purchasing an existing NRAS dwelling from a current NRAS investor.

Can I sell my NRAS property or remove it from the Scheme?

Investors no longer wanting to participate in the Scheme can sell their dwelling or cease their participation prior to completion of the 10 year NRAS term without incurring any early exit penalties:

  • A dwelling can be sold to another investor who undertakes to comply with NRAS obligations

  • An equivalent dwelling can be offered as a substitute dwelling for the remaining part of the 10-year period

At the end of the 10 year NRAS period, properties revert to full control and ownership of the investor.

Who can rent an NRAS dwelling?

Income levels for eligible NRAS tenants accommodate a range of low and moderate incomes. These include key and essential service workers, such as childcare workers, nurses, police officers, fire-fighters and paramedics.

To allow for income increases above CPI, income increases of up to 25% above the initial income limit thresholds for two years after entering an NRAS dwelling are allowed before becoming ineligible for the discounted rent.

The tenants of eligible dwellings must meet the income requirements prescribed by the Scheme.

Am I eligible?

To be eligible to rent an NRAS property, potential tenants

  • will need to provide the approved participant with evidence of their gross income for the previous 12 months before the day they enter the dwelling, both with their initial application and every year afterwards. Documents include:

    • copies of payslips;

    • notices of assessment for annual income tax returns;

    • letters from employers;

    • statements from superannuation funds;

    • statements from Centrelink;

    • statements of dividends or rents paid.

  • must not exceed the income limits for their household type by more than 25% over two consecutive years.

  • must be a citizen or permanent resident of Australia

  • must show that you are able to maintain a successful tenancy.

How do I apply?

The application process is dependent on the state. For NSW, simply contact an NRAS tenancy manager directly to register interest.