NRAS – An Unbelievable Property Investment Opportunity

Imagine a world where you can invest in a rental property, obtain quality tenants, in prime locations and receive a 10yr rental income guarantee from the Government that could possibly make the investment positively geared!

What’s that you say..”we’re dreaming!”   That’s okay, we can understand your doubt as we were initially sceptical as well, but after doing our research, we’re here to tell you that the opportunity exists. This is an opportunity that every property investor or potential property investor should be considering or at least be fully aware of.

This scheme is known as the National Rental Affordability Scheme (NRAS).  The scheme has been developed to assist with reducing housing affordability in locations where affordability is out of reach for many of the people that are necessary for a community to operate.  These members of the community tend to be those employed in professions such as Child Care, Social Work, Health and Medical services (Nurses and Paramedics), Law enforcement, Fire Services and Teaching.  This is not your normal Social Housing programme aimed at the long term unemployed.

How does NRAS work?

Basically, NRAS works this way:

The owner of the property agrees to rent their property to a qualified tenant for 80% of the current market rental.  In return for the discounted rent, they will receive the following tax offsets from the State/territory and Federal governments:

Federal:                 $7,763 per dwelling per year

State/territory:      $2,587 per dwelling per year (2013/2014 figures)

As part of the agreement, the property will have to be placed into the programme for a 10 year period.  As the owner you will be entitled to all the normal tax deductions that you would be entitled to if the property was a normal investment property, except that you will have the added bonus of not being taxed on the offsets that are paid by the State and Federal Governments.

Can I take the property out of the NRAS programme?

The property can be taken out of the programme within the ten year period.  To do this you must either:

  •  sell the property to another investor who will comply with the NRAS obligations      (property managers can assist with this); or
  • arrange to have the property replaced by a similar property in the same area.

After the ten year period the property reverts back to full control of the investor.

Are there NRAS guidelines on how much the tenants can earn?

 The tenants are assessed on an income basis which is determined by the number of adults and children in the family (e.g. current eligibility for initial placement is $94,021 for a couple with two children).  As mentioned, those in the service industry such as the child care workers, paramedics, police, teachers and nurses are the target market.  It is estimated that 1.5 million Australian households are currently eligible to rent NRAS properties.

Where are the NRAS properties located?

 NRAS Properties are located throughout each state/territory within Australia. These properties can be found in capital cities and smaller regional towns.  Properties range from studio units to larger houses so there are plenty of options for investors to select from.

For the long term benefit you may want to look at an NRAS property that is in a good capital growth area – Capital Funding Group can assist you with this.

Will the Government continue to support NRAS?

 The NRAS is an Australian Government initiative. The scheme aims to stimulate the construction of 50,000 affordable, high quality rental dwellings across Australia. Up to 35,000 dwellings will be supported in years up to 2014-15, with a further 15,000 dwellings to be supported beyond 2014-15. The investment offset will obviously continue for ten years after the purchase of your investment property.

Can I borrow to invest in an NRAS property?

 There are lenders who will provide finance to assist with a purchase of a NRAS investment property, however not all lenders are keen to participate.  Amongst these lenders there are some significant differences in lending policy.  It’s important to get your financing right with these purchases, and we suggest that you contact us to discuss your options before committing to an investment.

What structures can I use to invest in NRAS properties?

You are able to invest in an NRAS property using the same structures that you can use with a normal investment property, which are any of the following:

–        Individual

–        Joint Tenants

–        Tenants in common

–        Trusts – Unit or Family

–        Company

–        Self Managed Superannuation Fund

If you’re not sure what structure best suits your requirements, then feel free to contact us and we can provide you with guidance on this matter.

Here is a financial example of how an NRAS Investment compares to a Standard Investment property investment.

Based on a property worth $400,000 and borrowing the full amount


Standard Investment Property

NRAS Property

Rent per week



Rent annually



Expenses #



Interest at 6%



Cash outlay *



Non-cash deductions
Capital Allowance #



Depreciation #



Total non cash deductions



Total Taxable Loss ^



Tax refund at 30%



Cash Flow Summary
Tax refund



Gov NRAS rebate






Less Cash Outlay





Cash inflow /   (outflow)



* Income (rent annually) – expenses – interest = Cash Outlay

# Estimates

^ Cash outlay plus Total Non-cash deductions

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ShayneArticle written by Shayne Fergus, Director of Capital Funding Group.

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