Both State and Federal governments understand that the growing cost of housing, exacerbated by the growing cost of living in general has a huge impact on Australians and the ability to meet their financial needs.
With this in mind the Governments long-term response to this is NRAS; i.e. National Rental Affordability Scheme. Both state and federal governments have a partnership with each other in order to provide financial incentives to:
- Increase supply of affordable rental housing;
- Encourage private investors into this space rather than government capital outlays; and
- Reduce rental costs for low to moderate-income households.
This government scheme commenced in 2008 and as of today there are no more allocations of incentives; hence availability of stock is now limited.
Investors in the private sector; not social housing
As noted above, the scheme relies on private funds to build new housing; and the government has done this by compensating; over 10 years, approximately $10,000* per year; or $100,000 over 10 years to investors.
As an investor, you are paid the $10,000* per year as compensation for renting the property to eligible tenants at a rental value below market value of 20%. Regardless of this 20% discount to market rent, investors should still be better off as a result of the tax incentive provided, as governments want to ensure it attracts private investors and provides them with financial benefits.
How does it change your numbers?
Below is how an NRAS property can change your cash flow for the better, definitely worth a look into if you are in the market to purchase an investment property.
(Assumptions; Income of $100,000, Rental Market Value of $400 p/w, Expenses/deductions at market value including interest rates of 4.5%, NRAS tax credit includes cpi increase for 2016/2017)
As can be seen from above, these properties are a very attractive option, should you be looking at buying an investment property. This scheme is not used for social housing but rather these dwellings are private property that you, as the investor, own.
Like any investment, investors must assess their own individual situation as well as the investment property; on its own merits.
If this sounds like a good option for your, take a look at the NRAS properties we currently have available
Or contact us on 1300 187 894. Arrange a meeting with our advisor and we will run your numbers through our property investment calculator to show you how an NRAS property can help you pay off your personal debts sooner.
*Information on this page is general and is not an exact representation for each individual circumstance or property available through NRAS. A thorough finance check is required to equate the benefits for each individual circumstance.
*This article is for general information purposes only. It is not intended as financial or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser.
PEB Group is a complete property advisory service for Perth families. Offices are located in Inglewood and Willetton, Perth, Western Australia and offer service in - Financial Planning · Finance Broking · Property Management · Property Sales · Property Investment · Development
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