There are some great opportunities available at present to invest in brand new, potentially cash positive properties with generous Government subsidies for up to 10 years. The National Rental Affordability Scheme or NRAS is a unique investment alternative.
Individual investors can participate in the scheme by purchasing an NRAS approved property from a developer who has submitted the homes for approval and has organised an approved tenancy manager.
The key points of the scheme are as follows:
- All properties offered under the NRAS need to have been approved by the relevant Federal Government department.
- Each property or group of properties must be managed by an approved tenancy manager.
- Rents are set at 20% below market rents (or 25% when the manager is a charitable institution).
- Tenants are screened and approved using normal property management guidelines but must meet nominated entry and upper income restrictions.
- You retain the ability to approve the tenant.
- Investors receive a tax incentive currently set at $9,524 per year. This is indexed to the rental component of the CPI.
- The incentive is paid when your tax return is processed or via a tax variation.
- The scheme is set to run for 10 years, after which the property would revert to your control.
- You can opt out of the scheme at any time with appropriate notice ; although there may be financial exit penalties.
- All the usual property investment deductions are applicable.
You will find more information at the Department of Environment website.
Queensland property researcher and commentator, Michael Matusik, recently in one of his Snapshots. He noted that all standard residential tenancy laws apply to NRAS properties. Hence the same rules apply for maintenance, evictions and responsibilities of tenants. His closing comment is positive, “NRAS presents a new opportunity for government, property investors, developers and not for profit organisations to work together to increase the supply of affordable rental housing in Australia”.
You will find a selection of NRAS properties on the Law Property Australia new home options page.