NATIONAL RENTAL AFFORDABILITY SCHEME (NRAS)
What is the National Rental Affordability Scheme?
In the 2008 Commonwealth Budget, the Rudd Government delivered on its election commitment to create a National Rental Affordability Scheme (NRAS). This scheme is designed to attract private investors to assist to deliver up to 100,000 new homes by 2018.
The simple fact is that supply and demand have created a shortfall in housing in the Brisbane area and the State and Federal Government policy objective is to reduce the massive housing shortage and improve rental affordability.Therefore they have have devised a stimulus package that will work in the favour of private investors.
What are the main points?
What do we mean by “Affordable Housing”
For this project, affordable housing is defined as follows:
What is a Tax Credit?
The Commonwealth provides a $6,504 Refundable Tax Offset per approved dwelling per year for 10 years. This reduces your tax payable or can be received as a tax refund if you do not have sufficient tax payable. The State provides $2,168 per dwelling per year as ‘non-assessable, non exempt’ incentive for 10 years. These entitlements are indexed to the rental component of the Consumer Price Index annually.
Individuals, corporations and superannuation funds can be entitled to the Tax Incentive. The Australia Tax Office provides guidance on how the incentive can be distributed in unit trusts or other trust arrangements. Please follow the line to the ATO's page to find out more abou the tax inentive. 'National Rental Affordability Scheme - Refundable tax offset and other taxation issues'.
Which tenants are eligible to rent these properties?
Click here to find out who is eligible to rent a NRAS property.How can this realisitically benefit you? For many PAYE and PAYG taxpayers their investment in one or two NRAS properties, with an interest only loan, is indeed actually or very nearly cash flow positive.
"Cash flow positive" in investment terms means that the combination of income (rents), depreciation and tax advantages, including the $8,600 tax credit received by the investor are greater than the cost of buying (interest on mortgage) and maintaining the investment.
The consortium is also offering a secured income stream. Owners of rented properties will know that vacancy risk cannot be insured. The insurance industry sees vacancy risk as a "normal commercial risk".
However in order to provide a higher level of income security for NRAS owners the Consotium and AON have undertaken a full analysis of vacancy rish under NRAS and the consotium has adopted the following approach:
How many NRAS properties are available?
The Federal Government plans to have 50,000 NRAS homes Australia-wide built by the end of 2012.
However the process of gaining approval for each home and the allocation of these to investors is time consuming and means that relatively few properties are currently available.
The properties are sold on a first come first service basis to investors with pre-approved finance or cash-funds. So if you are interested in purchasing an investment property the first step you need to take is to ensure that you are eligible for a pre-approved mortgage (if needed) as in most cases clients have had to move very quickly when a property is released for sale.
Harringtons Property Management are currently working with developers who either have NRAS approved properties ready to purchase or who are in the process of building properties in order to secure approval under the NRAS scheme.
If you are a developer or know of any developers who are currently building investment properties please contact us and we will contact them directly to discuss how they can be involved.Summary
If you are considering investing in a property as an alternative to shares or superannuation, then please consider the benefits of the NRAS program:
These high quality brand new house and land packages are finished to exceptional standards and are selling fast to investors with the view of long term security, high rental yield and focus on capital growth.
Please click here and one of our friendly team will contact you to discuss your options with you.
Please click here to find out what NRAS stock is currently available to purchase.
* This offer is not available when purchasing an NRAS property.
12 MONTHS FREE PROPERTY MANAGEMENT SERVICES WHEN YOU BUY AN INVESTMENT PROPERTY VIA HARRINGTONS PROPERTY MANAGEMENT *
Who can have their properties approved under the National Rental Affordability Scheme?
How do you get your investment property NRAS approved? Call our office now and we will assist you with the process.