The National Rental Affordability Scheme

The National Rental Affordability Scheme (NRAS) is a long-term commitment by the Australian Government to invest in affordable rental housing. NRAS seeks to address the shortage of affordable rental housing by offering tax-free financial incentives to the business sector and community organisations to build and rent dwellings to low and moderate income households at rates below market value for 10 years. It aims to:

Increase the supply of new affordable rental housing.
Reduce rental costs for low to moderate income households.
Encourage large scale investment and innovative management of affordable housing.

The Government has committed approximately $1 billion to the Scheme over four years to stimulate the supply of up to 50,000 new affordable rental dwellings.

How does NRAS work?

NRAS provides a National Rental Incentive to the business sector and community organisations to build and rent dwellings to low and moderate income households at least 20% below market rates.

The annual incentive is income tax-free, indexed annually and complemented by existing taxation arrangements including depreciation. The incentive currently comprises of:

An Australian Government contribution of $7,143 per dwelling per year for 10 years as a cash payment.
A State or Territory Government contribution of $2,381 per dwelling per year for 10 years as a direct payment.

Who benefits from the scheme?

NRAS aims to provide affordable rental housing for low to moderate households, including Australia’s key infrastructure workforce, such as teachers, nurses, police officers and paramedics. Eligible individuals and families will be able to rent NRAS dwellings at 20% below market rates, thus making their housing more affordable.

NRAS is intended as a tax-free commercial, profitable investment for participants while also increasing the supply of affordable housing in Australia. Investors in the Scheme may benefit from enhanced cash returns, certainty of the annual rental incentive and reduced vacancy rates over the 10-year life of the NRAS.

Who is eligible to participate in NRAS?

Eligible participants may include financial institutions, investors, private developers, not-for-profit organisations and local governments who may build, own, finance or manage the NRAS dwellings.

Who can rent an NRAS dwelling?

Income levels for eligible NRAS tenants are generous and accommodate a range of low to moderate income earners. The NRAS also allows for tenant salary increases of 25% above the income limits.

For a comprehensive list of eligible income levels provided by the Government,

visit the SEWPaC website.

Who manages the Scheme?

The Department of Sustainability, Environment, Water, Population and Communities (SEWPaC) is responsible for the implementation and ongoing management of the NRAS, in consultation with the Australian Taxation Office.

The Australian Government is working closely with State and Territory Governments, investors, financial institutions, property developers and not-for-profit housing providers in the ongoing management and implementation of NRAS.

The benefits of investing in an NRAS approved property include:

Increase in income.
Ownership of a newly built property.
Potential investment earnings from the growth in the property value.
Potential negative gearing benefits and positive cash flow at the same time.
Tax-free income indexed for 10 years.
Tax offsets indexed for 10 years.
Tax deductions on interest payments.
Tax deductions on property depreciation.
Social responsible investment in affordable rental housing.
A choice of properties throughout Australia from one source.
Ability to opt out at any time.

For detailed information provided by the Government, visit the SEWPaC website.