NRAS overview

The National Rental Affordability Scheme (NRAS) is a long term commitment by the Australian Federal and State governments to investors prepared to build affordable rental housing.  The aim of NRAS is to:

  • increase the supply of new affordable rental housing;
  • reduce rental costs for low and moderate income households; and
  • encourage large scale investment and innovative management of affordable housing.

The Australian Government is committed to stimulating the construction of 50,000 high-quality homes and apartments. The program targets "middle Australia" and is not a public housing program.  It is a tax-free financial incentive to encourage private investment in the lower price range of the residential construction market.

Investing in NRAS

NRAS offers a substantial annual tax-free incentive (the NRAS incentive) for the duration of the 10 year program. The annual income-tax free Incentive is currently $10,350, and is indexed each year to the rental component of the CPI.  The Incentive comprises:

  • $7,763 from the Australian Government per year (as a refundable tax offset or payment); and
  • $2,587 from the State Government per year (in direct or in-kind financial support).

The NRAS Incentive not available to standard residential property investors.  Each NRAS property attracts the incentive for 10 years, so long as investors continue to comply with conditions relating to tenant eligibility and rent discounts. Investors must agree to rent approved dwellings at a rate that is at least 20 per cent below prevailing market rates, to low and moderate income households.

Benefits of investing in NRAS

  • NRAS investors can expect to benefit from the annual NRAS Incentive, rental yields and potential for capital gain.
  • NRAS is intended to be a commercial, profitable investment for participants, while also assisting Australia to increase the supply of affordable housing.
  • With higher returns on direct residential property than returns on office or industrial property over the last 10 years, residential property can be a profitable investment.

NRAS tenants

NRAS tenants tend to be key workers, such as childcare workers, nurses, police officers, fire-fighters and paramedics.  Approximately 1.5 million households are currently eligible to rent NRAS properties.
Investors can pick any tenants for NRAS properties, as long as these tenants are within the required income threshold.
Income levels for eligible NRAS tenants are generous and allow for tenant salary increases of 25 per cent above the entry income limit.

To find out more information about NRAS, please visit http://www.fahcsia.gov.au/our-responsibilities/housing-support/programs-services/national-rental-affordability-scheme