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Background on National Rental Affordability Scheme (NRAS)
The National Rental Affordability Scheme is an Australian Federal Government initiative to increase the supply of new affordable rental dwellings by up to 50,000 by June 2012.
Under NRAS, the Federal, State Governments and Territories will provide tax-free incentives to approved applicants with the aim to:
- Increase the supply of affordable rental dwellings across Australia.
- Reduce the rental costs for low to moderate income households.
- Encourage large scale investment and innovative delivery of Affordable Housing by the private sector.
NRAS Overview
The Australian Government has combined with State and Territory Governments to offer incentives to investors and housing providers to build properties which will be rented out at least 20 per cent below the market value rent.
The Government Incentives are based on $9,140 per annum in tax free incentives to owners of approved properties for 10 years. The Government Incentives are indexed annually to the rental component of the Consumer Price Index.
An owner of an Approved NRAS Property will receive the rental income, potential capital growth and any taxation deductions associated with the owning of the property.
The Australia Property Rental Market
The Australian Federal Government established the National Housing Supply Council in 2008 to undertake a study on the future of housing demand, supply and affordability in Australia. The Council released its State of Supply Report in February 2009, which highlights the ongoing trend in upward pressure on the private rental sector, private renters and the increasing difficulties of access to property and increased affordability problems.
The Report identified several key issues in the housing industry, including:
- projected demand exceeding supply;
- increasing housing costs affecting lower and middle income home buyers and tenants; and
- planning and development processes that constrain housing supply and affordability.
The Council report estimates that within 5 years by the end of 2013 that there will be a shortfall in dwelling supply of 203,000 properties. This shortfall is expected to continue until 2028 with an increase in the supply of new homes required to meet future demand.
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