NRAS explained

What is the NRAS?


The National Rental Affordability Scheme is an initiative of the Federal Government and is jointly funded and administered with the States. Designed to provide quality rental homes at reduced rents for the large number of Australian families unable to buy their own homes or to afford the full cost of market related rents. In essence the Government is using indexed “Tax Credits” currently at $10,350 per property, per year, to pay back to investors who agree to invest in a NRAS approved property and accept rents @ 20% lower than normal market rents. (QLD up to 25%)

Having said this you will in fact be better off after receiving the Tax Credit than you would having received the 20% rent.

How?  *A property that would receive say $350 pw discounted by 20% ($70) down to $280 pw rental income in the NRAS; you will then automatically receive a Tax Credit (no matter what your taxable income is + which is completely free of other taxes) of $10,350 divided by 52 weeks = $199. What this means to you is that you are in fact $129 per week ahead within the NRAS programme, than if you bought the same property out of the NRAS!

One can apply to the ATO to have this Tax Credit (NRAS Tax Incentive) brought forward to improve your cash flow by paying less tax per month.


What makes this investment Cash Flow Positive?

  • Your marginal rate of tax is reduced
  • Rental Income received (that is market related and discounted by 20%)
  • Tax Credit of $10,350.00
  • Depreciation
  • Other expenses such as interest on the loan, accounting fees etc


“There is a misconception that the NRAS is the same as the Social Housing Program – the two products could not be further removed from each other and only people who do not have an understanding of what the NRAS is about will argue this point. Listen to them at your peril.”


What are the roles and responsibilities of the Rental Management Group?

  • Sign a heads of agreement to oversee and manage the NRAS properties for a period of 10 years
  • Select suitable tenants from the Tenant Pool
  • Collect the Tenant Bond and Install the tenant
  • Collect the rents
  • Overall management of the property on behalf of the owner (you)
  • The objective is “hassle free’ investment with management by exception resulting in little to no worry and stress free ownership
  • Whilst you sit back and collect the rental cheques!


Treasurer Wayne Swan explains in a letter to the Applicant :

“Thank you for your interest in affordable housing and the Australian Government’s National Rental Affordability Scheme. As you know, tent increases are outstripping wages growth and inflation. This is making it harder for Australians on a low to moderate income in the private rental market. The National Rental Affordability Scheme is a major supply-side initiative to make rental properties more affordable by encouraging large-scale investment rental housing for low and moderate income families and individuals.

It aims to assist institutional investors, developers and not-for-profit groups to deliver 50,000 rental dwellings over the next four financial years by creating a new residential property asset class for property investors.

The Scheme offers significant financial incentives to applicants commencing at a minimum value of $8000 (now $10,350 escalates with Rental CPI per anum) per dwelling annually, for a period of 10 years.

The Incentives provided under the Scheme will assist investors to develop proposals that provide an attractive rate of return. It presents a new investment opportunity in the Australian market. More than 1.5 million households will be eligible for tenancies under the scheme – a large and diverse pool of potential tenants for investors in affordable housing projects that will be made available through the Scheme.”

An excerpt from the document developed to provide Information to individuals, institutions and organisations that are considering investment in affordable rental housing.”


The NRAS Scheme has two primary goals that make it highly successful

  1. To increase the supply of new rental housing directly into the housing market nation wide
  2. To improve affordability for the eligible target groups

The NRAS Scheme will facilitate the construction of 50,000 dwellings nationally, to be supplied into the Rental Market for “Middle Australia” families and individuals

  • The Commonwealth Government has identified 1.500,000 households across Australia that are in housing stress (1.5 Million)

    • meaning that they cannot afford to buy a property to live in or rent one
  • A vast number of these households are ‘Middle Income Australians’ with a household income in excess of $110,000 pa. This represents a massive opportunity for Investors
    • There is simply insufficient accommodation available to meet this very high demand
    • with the supply shortfall to this Middle Australia Market running around 30,000 to 40,000 dwellings a year
  • New tenants are sourced via Immediate Access to the State Tenant Lists
  • The Federal and State Government stepped in with the NRAS initiative. An initiative to stimulate both Institutional and Private Investors to invest in the rental property market
    • an incentive scheme designed to encourage investors to develop additional housing for the rental market
    • To provide these rentals at affordable rents
    • Which in turn provides higher than usual returns for investors in the residential market
  • The NRAS program will provide “tax free incentives” to 50,000 new rental dwellings for a period of 10 years
  • This incentive is a Tax Credit of $10,350 per anum per dwelling, per year, for 10 years
    • Escalated at the Rental Component of CPI (last year being 5.4%) as published by the ABS in each state
    • Investors provide a minimum rental discount of 20% (where the property is managed up to 25%)
  • Example : If market related rent is $400pw and you apply a discount of $80pw to the tenant. Utilising the Tax Credit of $10,350 pa  or $199 per week … you will note that as an investor you are already $119 dollars ahead per week.
    • This is your incentive for choosing to Invest to assist some of the 1.5 million distressed households!
    • Market Rent is assessed at the Market Value of Rents charged by similar accommodation in the Local Real Estate Rental Market
  • NRAS housing is no different to the owner occupied neighbour or the open market rented property across the street

    • there is no discrimination in quality or fittings
    • NRAS housing is distributed randomly through existing and new estates
    • Properties that apply for and receive the NRAS Incentive can remain in the scheme for 10 years
  • There is provision for on selling the properties and leaving them in scheme, NRAS administrators receive ownership schedules annually to ensure that Endorsements are paid to the correct Owner Investors
    • replacing them with similar properties in the same area or simply exiting the Scheme with suitable notice
    • Eligible properties can be a studio apartment right through to a family home
  • This initiative provides a high degree of income-certainty for investors
  • Investments made are in areas that will achieve capital appreciation and will grow at the same rate as the neighbour who is not in the NRAS Scheme
  • Each NRAS approved dwelling must comply with being close to public transport, schools, hospitals and basic infrastructure


What does it mean to me? more

Government Web Site detailed explanation more

Investment Opportunities? more

Types of Investment Properties? more


Comments or questions are welcome.

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