Why invest in NRAS?
The National Rental Affordability Scheme (NRAS) is an Australian Government backed initiative delivered in partnership with the states and territories to stimulate residential investment property development and affordable rental properties. NRAS is not public housing or social housing; The Australian Government has no relationship with individual investors in NRAS dwellings. The government’s role is deliberately limited to the provision of financial incentives to NRAS approved participants which have received NRAS allocations through the application and allocation process.
An NRAS property manager conducts tenant selection, generally under guidance from the property investor, in accordance with their state or territory tenancy management laws. There are no special pre-qualifications to own an NRAS investment property when compared to traditional investment properties. There are pre-qualification for NRAS property tenants though, which include income requirements and in some states a means or asset test.
Typically, the NRAS investment properties are interspersed amongst non-NRAS properties, which are sold as standard property investments or owner-occupiers.
The NRAS properties are indistinguishable from the other investment properties; being built and completed with the same material and finishes which results in the same build quality required of state, territory and local planning requirements and building codes.
The NRAS incentive (currently $10,350pa) comes as two components: 75% as a refundable tax offset, and 25% as a payment from the state government. You should consult your financial, legal and taxation advisor to ascertain the best structure in which to purchase your NRAS investment property.
Selecting NRAS properties as your investment should be considered in the same manner as choosing a more traditional investment property.
We recommend that you consider the NRAS incentive as a leasing agreement on your investment property rather than as the investment property itself.
Will you move in after 10 years? Continue to rent? Sell? Bear in mind your target market when you do sell the property; is it suited towards a couple, a family or an individual? What is their profession and income likely to be? Will the area’s demographics be favourable to that buyer?
Don’t let the financial incentive detract from making a smart property investment; the NRAS property investment market is varied, as is the traditional property investment market. Contact NRAS Property Australia for an obligation free discussion regarding NRAS investment properties.