The Australian Government is committed to encouraging large-scale property investment and innovative delivery of housing solutions through the construction of 50,000 investment properties in the form of houses, townhouses and apartments.
The National Rental Affordability Scheme (NRAS) is a commitment by the Australian Government, in partnership with States and Territories, to invest in affordable rental properties and stimulate the real estate market nationally.
The property investment program, which commenced in 2008, seeks to provide a tax-free financial incentive to persons or entities purchasing an investment property within a new property development.
The NRAS investment incentive could be considered as a facet of the NRAS investment property leasing arrangements, rather than as a part of the investment property itself.
This is because the investment property owner can choose to exit the NRAS investment property agreement and incentive program at any time (in accordance with extant leasing and contractual arrangements) and still retain the investment property within their investment portfolio.
The investment property must be built by an approved developer and rented to targeted income households (the NRAS tenant) at a rate that is on average 20 percent below the market rate. These NRAS investment properties are located throughout Australia in a range of cities and suburbs. The fifth and final round of NRAS property allocations recently closed, with the final NRAS investment properties requiring to be tenanted before 30 June 2016.
The NRAS investment property financial incentive is currently $10,350pa (tax-free) for a maximum period of 10 years. The incentive is indexed to the rental component of the Housing Group Consumer Price Index.
The NRAS incentive is paid for each investment property (i.e. if 3 NRAS properties are owned, one NRAS property incentive is paid for each property) and the NRAS incentive is only paid when the NRAS property is occupied by an approved NRAS tenant.
This localised property investment strategy also provides for a measure of governmental influence to the spiralling rental rates in capital cities and key locations, as well as potentially reducing development and maintenance costs associated with reduced Federal and State infrastructure. Further information is available by contacting NRAS Property Australia.