National Sterling approved
We are excited to announce that in 2013 National Sterling has been approved to be part of the NRAS Scheme. Below is some basic information setting out what the NRAS scheme is and how it can benefit you as an investor. The National Rental Affordability Scheme (NRAS) is a long term commitment by the Australian Government in partnership with the states and territories, to invest in affordable rental housing. The Scheme, which commenced in 2008, aims to address the shortage of affordable rental housing by offering financial incentives to the business sector and community organisations to build and rent dwellings to qualified households at a rate that is at least 20 per cent below the prevailing market rates.
NRAS aims to:
• increase the supply of new affordable rental housing
• reduce rental costs qualified households
• encourage large-scale investment and innovative delivery of affordable
The Australian Government is committed to stimulating the construction of 50,000 high quality homes and apartments, providing affordable private rental properties for Australians and their families.
Why is the government doing this?
NRAS investors can expect to benefit from the annual NRAS Incentive, rental yields and 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,¹ residential property can be a profitable investment. While global house prices have fallen substantially globally, the Australian housing sector has shown resilience, primarily due to strong fundamentals – low vacancy rates, high population growth, insufficient housing stock, high employment and sound lending practices. Demand for residential property is high with the National Housing Supply Council’s State of Supply Report 2010 estimating a current housing supply deficit of 178,400 homes across Australia.
It is estimated that more than 1.5 million Australian households are eligible to rent NRAS properties.
Who can rent an NRAS property?
NRAS tenants tend to be key workers, such as childcare workers, nurses, police officers, fire-fighters and paramedics. It is estimated that 1.5 million Australian households are currently eligible to rent NRAS properties. Investors can pick any tenants for NRAS properties, as long as these tenants do not exceed a certain income threshold. All tenants will be veted via the normal policies and procedures that National Sterling Real Estate carry out.
Income levels for eligible NRAS tenants are generous and allow for tenant salary increases of 25 per cent above the entry income limit.
Contrary to what some people think about the scheme, it’s not another word for “Housing Commission”. It’s got nothing to do with getting unemployed people and derelicts into cheap housing. It’s actually about getting the key workers as mentioned above into more affordable housing closer to work.
What does the investor get?
The investor gets the following:
NRAS offers a substantial annual tax-free incentive, the NRAS Incentive, for every dwelling built under its backing.
Investors need to apply for NRAS Incentives, and if offered, must agree to rent approved dwellings at a rate that is at least 20 per cent below prevailing market rates.
The NRAS Incentive is a funding stream not available to standard residential property investors. Each approved dwelling attracts the NRAS Incentive for 10 years, so long as investors continue to comply with conditions relating to tenant eligibility and rent discounts.
The annual income-tax free Incentive is currently $9,981 per dwelling, and is indexed each year to the rental component of the CPI.
The Incentive comprises:
• an Australian Government contribution of $7,486 per dwelling per year (as a refundable tax offset or payment); and
• a State or Territory Government contribution of $2,495 per dwelling per year (in direct or in-kind financial support).
The Incentive provided under the Scheme assists investors and property developers to work up proposals that offer an attractive and competitive rate of return.
The Government is committed to ensuring that the full value of the NRAS Incentive is passed to all investors. Prospective investors are encouraged to talk to the Australian Tax Office before finalising their investment structure or applying for NRAS Incentives, to ensure this policy objective is achieved. The Australian Government has no legal or equitable claim over an NRAS property.
If you would like to register your interest to find out more about the NRAS scheme and how you can benefit from it as an investor, please email firstname.lastname@example.org. Include your name and contact details and one of our financial advisors will contact you to discuss further.