National Rental Affordability Scheme (NRAS)

The National Rental Affordability Scheme (NRAS) was created by the Council of Australian Governments (COAG) as part of a strategy to address housing affordability within Australia.

The scheme was established with the view to:

• increase the supply of affordable rental dwellings
• reduce rental costs for low and moderate income households; and
• encourage large-scale investment in, and innovative delivery of, affordable housing.

The scheme aims to create 50,000 new affordable rental dwellings across Australia by July 2014.

How Does It Work?

Primarily, the scheme works through a National Rental Incentive being offered to providers of newly developed dwellings on the basis that the dwellings are rented out at 20% below market value.

In return the investor receives a National Rental Incentive which is a tax free annual incentive that is indexed with movements in the rental component of Consumer Price Index (CPI). The incentive is payable for each dwelling in the scheme.

Currently the National Rental Incentive stands at $9,981 tax free per dwelling per annum and will be provided for the duration the scheme (10 years).

75% of the incentive is provided by both the Australian Government and the other 25% by the relevant State/Territory Government.

Under NRAS guidelines only lower to middle income earners are eligible to rent dwellings under the scheme. To establish whether a tenant is eligible for the scheme certain wage and asset criteria must be met.