NRAS Properties
You may have heard of the National Rental Affordability Scheme (NRAS), an Australian government program to increase private investment in affordable rental housing across the country.
Investors in eligible NRAS properties receive generous government incentives in return for agreeing to rent their property to an approved tenant at 20% below the market rate.
In most cases, the incentive payments more than cover the reduction in rental income.
In fact, in many cases, the payments can even make the property into a cashflow positive investment.
However, many people aren't sure what exactly an NRAS property is.
Read on to find out.
NRAS properties must be residential properties that are brand new.
You cannot add an existing rental property to NRAS.
In all other respects, NRAS properties are identical to other residential properties available on the market.
They might be separate houses, units or townhouses.
Typically they come with a range of turnkey features, such as curtains, TV points, landscaping and kitchen appliances.
These features mean that the property is ready to let as soon as it is sold - the first tenant can simply turn the key and move in.
The location of properties is also important.
Properties can only be approved for NRAS if they are in areas of high rental demand.
This demand could be caused by the location's popularity, desirable features, or undersupply of rental stock.
In any case, it's good news for investors as it means that the property will be located in an area where there are lots of available tenants, minimizing the risk of a long vacancy period.
You may be wondering how a normal property becomes eligible for NRAS.
Typically, a developer will submit an application to the government for some of its stock to be approved for participation in NRAS.
This must be done in minimum lots of 100 dwellings.
In any given postcode, only 30% of the stock can be approved for NRAS, although typically this percentage is much lower.
NRAS properties will be scattered throughout the development.
Once the government has approved the developer's application, the properties are sold through property agents that partner with the developer.
These agents will assist the purchaser to complete the necessary paperwork to ensure that their NRAS property is managed correctly and they receive their incentives at the right times.
It's really quite a straightforward process.
Once approved, NRAS properties remain eligible for incentives for a ten year period.
The owner has the right to remove their property from the scheme at any time, for example if they want to sell the property, or move into it themselves.
They retain all the normal legal rights of a landlord, including the right to select from a pool of eligible tenants.
One final topic to consider is how many NRAS properties are available.
The government has decided to approve 50,000 in total.
As of 2012, over 33,000 incentives had already been allocated, with over 6,000 already completed and tenanted.
Therefore, there is not an infinite supply of NRAS properties, and investors wishing to purchase one should act within the next 18 months to avoid disappointment.
Investors in eligible NRAS properties receive generous government incentives in return for agreeing to rent their property to an approved tenant at 20% below the market rate.
In most cases, the incentive payments more than cover the reduction in rental income.
In fact, in many cases, the payments can even make the property into a cashflow positive investment.
However, many people aren't sure what exactly an NRAS property is.
Read on to find out.
NRAS properties must be residential properties that are brand new.
You cannot add an existing rental property to NRAS.
In all other respects, NRAS properties are identical to other residential properties available on the market.
They might be separate houses, units or townhouses.
Typically they come with a range of turnkey features, such as curtains, TV points, landscaping and kitchen appliances.
These features mean that the property is ready to let as soon as it is sold - the first tenant can simply turn the key and move in.
The location of properties is also important.
Properties can only be approved for NRAS if they are in areas of high rental demand.
This demand could be caused by the location's popularity, desirable features, or undersupply of rental stock.
In any case, it's good news for investors as it means that the property will be located in an area where there are lots of available tenants, minimizing the risk of a long vacancy period.
You may be wondering how a normal property becomes eligible for NRAS.
Typically, a developer will submit an application to the government for some of its stock to be approved for participation in NRAS.
This must be done in minimum lots of 100 dwellings.
In any given postcode, only 30% of the stock can be approved for NRAS, although typically this percentage is much lower.
NRAS properties will be scattered throughout the development.
Once the government has approved the developer's application, the properties are sold through property agents that partner with the developer.
These agents will assist the purchaser to complete the necessary paperwork to ensure that their NRAS property is managed correctly and they receive their incentives at the right times.
It's really quite a straightforward process.
Once approved, NRAS properties remain eligible for incentives for a ten year period.
The owner has the right to remove their property from the scheme at any time, for example if they want to sell the property, or move into it themselves.
They retain all the normal legal rights of a landlord, including the right to select from a pool of eligible tenants.
One final topic to consider is how many NRAS properties are available.
The government has decided to approve 50,000 in total.
As of 2012, over 33,000 incentives had already been allocated, with over 6,000 already completed and tenanted.
Therefore, there is not an infinite supply of NRAS properties, and investors wishing to purchase one should act within the next 18 months to avoid disappointment.