Who to contact?
For any enquiries regarding the National Rental Affordability Scheme
Ph: 1800 334 505 Email: National Rental Affordability Scheme
Round Three - Call for Applications of the National Rental Affordability Scheme opened from 1 September 2009 and closes at 5pm AEST on Tuesday 31 August 2010. Applications will be assessed as they are received and decisions will be announced during the application period. For further information please visit the Round Three - Call for Applications National Rental Affordability Scheme webpage.
Introduction
The National Rental Affordability Scheme (NRAS) is an Australian Government initiative to stimulate the supply of new affordable rental dwellings by up to 50 000 by June 2012. Successful NRAS applicants are eligible to receive a National Rental Incentive for each approved dwelling where they are rented to eligible low and moderate income households at 20 per cent below market rates.
Potential investors in investment vehicles involving the NRAS should note that the allocation or reserved allocation of National Rental Incentives does not constitute Government endorsement of the development proposal as an investment opportunity.
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Background
Governments, the business sector and community organisations recognise that housing affordability is an issue of significant community concern. The growing cost of housing is having a serious impact on the ability of many Australians to meet their financial commitments.
Under NRAS, the Australian Government is providing Incentives to:
- increase the supply of affordable rental dwellings;
- reduce rental costs for low to moderate income households; and
- encourage large scale investment and innovative delivery of affordable housing.
The Scheme offers annual Incentives for ten years. The two key elements of the Incentive are:
- A Commonwealth Government Incentive currently of $6 504 per dwelling per year as a refundable tax offset or payment; and
- A State or Territory Government Incentive currently of $2 168 per dwelling per year in direct or in kind financial support.
The Incentive is provided annually on the condition that throughout the ten year period the dwelling is rented at 20 per cent below the market rent to eligible low and moderate income households.
NRAS is designed to pool significant resources from a range of participants including financial institutions, non-profit organisations and Local Government which, when combined with the Incentives from the Scheme, will increase the supply of lower-rent housing. These resources could include loans; equity investments; capital grants by Commonwealth, State and Territory or Local Governments; donations by charities; free or discounted land by churches; or contributions by developers in accordance with planning requirements.
The tenant eligibility criteria ensure that the Scheme is open to a range of household types on low and moderate incomes
Implementation and administration of NRAS
The Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) is responsible for the implementation and ongoing management of NRAS, in consultation with the Australian Taxation Office. The Commonwealth is working with State and Territory Governments, investors and not-for-profit housing providers in ongoing implementation of NRAS, which commenced on 1 July 2008.
1. Interaction between NRAS and the Social Housing Initiative
The Australian Government is encouraging affordable housing proposals which seek to use funding from the Social Housing Initiative (part of the Nation Building Economic Stimulus Plan) and NRAS to maximise housing outcomes for low and moderate income households through the construction of socially balanced residential developments.
The Government also is encouraging mixed developments with some dwellings funded under the Social Housing Initiative and others attracting the National Rental Incentive.
Proposals which are linked to applications under the Social Housing Initiative are encouraged where they create additional building activity, for instance, by proposing to construct additional dwellings to be supported by the NRAS.
Funding from the Social Housing Initiative cannot be used as a capital contribution for dwellings that already attract or will seek a National Rental Incentive under the NRAS.
2. Interaction between NRAS and State owned land released for residential development
(State owned land released for residential development that may include a proportion attracting NRAS Incentives)
The second component allows for developments on public land which has been released for affordable housing by State and Territory Governments. The land is identified by State and Territory governments and the Commonwealth agrees that it is suitable to include homes attracting NRAS incentives to help facilitate mixed developments that include a proportion of affordable housing supported by NRAS.
Successful proponents for these developments may be invited to apply under NRAS, where they have proposed a component of affordable rental homes. The application process will supplement the State/Territory procurement process.
The Commonwealth will support the States' and Territories' identification and assessment of the local housing need in such proposals.
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3. Applications that involve 1,000 or more dwellings
The third component relates to large scale investment into affordable housing of more than 1,000 dwellings. This component is targeted at institutional investors and large residential development companies.
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Legislation / Regulations / Guidelines
The legislative framework for the Scheme is provided through the National Rental Affordability Scheme Act 2008, the National Rental Affordability Scheme (Consequential Amendments) Act 2008 and the National Rental Affordability Scheme Regulations.
These guidelines provide details of the implementation and administration of the National Rental Affordability Scheme to complement the Legislative and Regulatory Framework. If there is any inconsistency between these guidelines and the above mentioned legislation, the legislation prevails to the extent of the inconsistency.
Mandatory Requirements
Mandatory requirements of the Scheme include:
- Dwellings will:
- comply with State, Territory and Local Government planning and building codes and requirements,
- be rented to 'eligible tenants,'
- be rented at a rate that is at least 20 per cent below the market rate.
- Dwellings must either:
- not have been lived in as a residence; or
- not have been lived in as a residence since having been made fit for occupancy where otherwise the dwelling was recognised as being uninhabitable; or
- if it has been converted to create additional residences, then a part of the dwelling or building that is capable of being lived in as a separate residence must not have been lived in as a separate residence.
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Assessment Criteria
The Assessment Criteria for each component of Round Three are detailed in National Rental Affordability Scheme Regulations, Schedule 1, linked below.
- Applications which link to proposals for the Social Housing initiative component of the Nation Building and Economic Stimulus Plan. Assessment Criteria Set 5.
- Applications which seek to have the private sector develop state-owned land that has been released for residential development and include a proportion attracting NRAS incentives. Assessment Criteria Set 3.
- Applications which propose to construct a minimum of 1,000 dwellings as a large scale portfolio of affordable housing. Assessment Criteria Set 4.
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NRAS Post Implementation Review
At the commencement of the National Rental Affordability Scheme (NRAS), the Government indicated its commitment to review the implementation of the Scheme in its first two years of operation to identify refinements that could be made for later years. In particular to identify whether there was any scope for:
- simplifying the Scheme,
- reducing the administrative burden on providers, or
- addressing any evolving issues to ensure that the Scheme continues to meet its objectives in the most efficient way.
Submissions to the NRAS Post Implementation Review (PIR) closed on 6 October 2009. These submissions are now being analysed.
Terms of Reference
The Terms of Reference for the PIR are:
- Examine the extent to which the National Rental Affordability Scheme (NRAS) has met its stated objectives to 30 June 2009.
- Examine and analyse evolving issues in the Scheme, with particular reference to its administration, marketing activities, compliance, investor participation, assessment processes, economic feasibility (including effectiveness of the level of Incentive), and other matters which have impacted on the Scheme's early implementation.
- Advise on processes and possible adjustments to the Scheme's current settings to progress the Expansion Phase of the Scheme to July 2012.
Outcomes of the PIR
The findings of the Review will highlight any adjustments or revised settings which may be necessary to effectively progress the Scheme to July 2012. The findings will also flow into the formal evaluation of the Scheme to be undertaken in 2012.
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NRAS Clearinghouse tools
In 2008, the Australian Government engaged the Community Housing Federation of Australia (CHFA) to establish and provide ongoing management of an Internet based, 'one stop shop' clearinghouse through which interested applicants and partners in NRAS can access tools and products relevant to their business, including the NRAS financial modelling tool.
The modelling tool was developed by Ernst and Young, under contract to the Australian Government, to demonstrate the financial returns that may be available through investing in residential property supported by the NRAS, and promote a better understanding of how the scheme operates. The financial modelling tool can be downloaded free of charge via the CHFA clearinghouse - see link below. Note, however, that you are encouraged to seek your own independent financial advice when deciding whether to invest in residential property supported by the NRAS.
The CHFA clearinghouse provides interested applicants and partners in NRAS with:
- the NRAS financial modelling tool;
- tools and products relevant to a suite of topics including brokerage and legal issues, consultants, development capacity, general housing research, risk assessment and management, business acumen, decision making and project management, finance, governance and prudential arrangements, sustainability and green building and other related information;
- access to resources and information on NRAS, including contact information for individuals and organisations with proven expertise in affordable housing;
- access to legal documents, financial planning modules, standard partnership agreements and partnership development kits;
- an opportunity for participants and other interested parties to share information through an on-line forum and to link with organisations seeking partners; and
- topics related to the Australian Government's Nation Building and Jobs Plan (NBJP).
The clearinghouse can be accessed via the Community Housing Federation of Australia website. For further information on accessing the Clearinghouse, please contact CHFA on (02) 6232 5043 or by email at chfa (chfa@chfa.com.au).
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Small-Scale or Private Investors
As the NRAS aims to encourage large-scale investment in affordable housing, it is not directly available to small-scale, private, individual investors in the rental property market unless they participate as part of a non entity or other joint venture arrangement. These investors could also become involved by investing in entities that participate directly in the Scheme, for example, through a superannuation fund or property trust.
There is no requirement under the Scheme for the incentives to be passed on to the owners of the properties. The arrangements between dwelling owners and approved participants are a matter for those parties and will not be facilitated or prescribed by the Australian Government.
Where dwellings are approved under NRAS, investors should be aware that this does not mean that the Australian Government endorses, guarantees or secures the investment in any way. Investors and approved participants should also be aware that provision of the Incentive is dependent on satisfactory completion of all conditions and compliance requirements under the Scheme.
Investors should undertake their own investigations and seek appropriate independent investment advice to ensure they are satisfied that investing in an NRAS dwelling is the right investment for their individual circumstances.
State and Territory Contacts and Priority Areas of Interest
For information which specifically relates to State/Territory affordable housing priorities (including planning and building requirements) and State/Territory contributions to National Rental Incentives, please see the contacts below. It is in your interests to ensure that you fully understand State/Territory Government housing priorities and directions.
National Rental Affordability Scheme - State and Territory Government Contacts
Australian Capital Territory
Simon Tennent
Senior Manager, Strategic Project Facilitation
Department of Land and Property Services
490 Northbourne Avenue
Dickson ACT 2602
Phone: (02) 6205 4622
Email: simon.tennent@act.gov.au
Link: Department of Disability, Housing and Community Services - ACT
New South Wales
Centre for Affordable Housing
Housing NSW
Phone: (02) 8753 8185
Email: nras (nras@housing.nsw.gov.au)
Link: Housing NSW - Centre for Affordable Housing
Northern Territory
John Wade
Senior Policy and Project Officer
Department of Housing, Local Government and Regional Services
Phone: (08) 8999 8315
Link: Department of Local Government and Housing - Northern Territory
Queensland
Kevin Bottle
Manager, Planning Supply and National Rental Affordability Scheme
Private Housing Support
Department of Housing
Phone: (07) 3227 7949
Link: Department of Housing - Queensland
South Australia
Peter Stojanovich
Manager Investment Partnerships
Community Partnerships
Department for Families and Communities
Phone: (08) 7424 7366
Link: Department of Families and Communities - South Australia
Tasmania
Peter White
Manager Housing Innovation Unit
Department of Health and Human Services
Phone: (03) 6233 8952
Link: Department of Health and Human Services - Tasmania
Western Australia
Karyn Ash
Principal Policy Officer
Department of Housing
Phone: (08) 9440 2543
Link: Department of Housing - Western Australia
Victoria
Specific state based queries should in the first instance be directed to the following email contact: nras (nras@dhs.vic.gov.au).
Link: Office of Housing - Victoria
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Potential Tenants
New NRAS dwellings will become available for rent by 30 June 2012 and will continue to be rented under the Scheme for up to 10 years. As there is considerable demand for these dwellings there is no guarantee that you will be able to rent a dwelling developed under the Scheme.
The Australian Government does not select tenants or maintain a waiting list for homes supported by NRAS. This is done by the tenancy manager of the particular property. Tenants need to contact the tenancy manager directly to register their interest. The allocation of NRAS dwellings to tenants is assessed by, and at the discretion of, the tenancy management organisation. As long as NRAS eligibility requirements are met, decisions will be made in line with their usual policies and processes.
Prospective tenants seeking affordable rental accommodation in Queensland should contact the Department of Communities (Housing and Homelessness Services) on 1300 880 882 or email the Department of Housing Queensland – ‘nras contact’ (nras@housing.qld.gov.au) and ask for information based on their situation. Photos, property locations/details and a full set of eligibility criteria are available from Queensland Government: NRAS website - as part of the Information for prospective tenants in Queensland fact sheet.
Tenant Income Levels
NRAS homes are required to be rented to eligible tenants at least 20 per cent below the market rent to be eligible for the National Rental Incentive annually. The income levels for eligible tenants are specified in the NRAS Regulations. Initial tenant income levels are assessed against gross income according to the household composition as identified below.
| Household type |
Initial income limit $ |
Upper income limit $ |
| One adult |
41,514 |
51,893 |
| 2 adults |
57,391 |
71,739 |
| 3 adults |
73,269 |
91,587 |
| 4 adults |
89,146 |
111,433 |
| Sole parent with 1 child |
57,432 |
71,790 |
| Sole parent with 2 children |
71,200 |
89,000 |
| Sole parent with 3 children |
84,968 |
106,210 |
| Couple with 1 child |
71,159 |
88,949 |
| Couple with 2 children |
84,927 |
106,159 |
| Couple with 3 children |
98,695 |
123,369 |
Household income limits are indexed annually on 1 May in accordance with the NRAS tenant income index.
Eligible tenants’ income must be equal to or less than the initial income limit when they become a tenant of an NRAS dwelling. Income may increase up to 25 per cent (the upper income limit) before their eligibility is affected.
Incoming NRAS eligibility for household types not covered above can be calculated using the values below:
| Person type: |
Income level |
| First adult |
$41,514 |
| Each additional adult |
$15,877 |
| Each child |
$13,768 |
| First sole parent |
$43,664 |
For NRAS purposes, a household is considered to be all persons ordinarily residing in the dwelling. The Department therefore requires all persons who ordinarily reside in an approved rental dwelling to have their income included as a member of the one household, in accordance with the income limits.
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Tenancy Managers
Tenants interested in renting a dwelling should contact a tenancy manager with properties in their desired location. Details of additional tenancy managers will be placed on this website as they become available.
Indexation
Market Rent
An independent written valuation of the market rent is required for each dwelling when it first becomes available for rent under the NRAS and at the end of the fourth and seventh years of the approved rental dwelling's 10 year participation in the Scheme. Rent must be charged at no more than 80% per cent of the market rent valuation.
Other than for the first, fifth and eight years, variations to market rents in NRAS Dwellings can be based on:
- local or State based rental movement data; or
- desk-top valuation, that is, consideration of reports, data and information at hand; or
- the NRAS market index, that is, the rents component of the Housing Group of the Consumer Price Index (CPI)for the year ending in the December quarter immediately preceding the current NRAS year at the capital city rate for the State in which the dwelling is located.
There is to be a maximum of one rent increase for each dwelling each year.
Any increase to rent must not exceed the percentage change in the rental component of the Housing Group CPI.
Housing Group CPI by capital city for NRAS year 1 May 2009 – 30 April 2010.
| City/State |
per cent |
| Sydney (New South Wales) |
8.0 |
| Melbourne (Victoria) |
6.6 |
| Brisbane (Queensland) |
10.1 |
| Adelaide (South Australia) |
5.4 |
| Perth (Western Australia) |
12.2 |
| Hobart (Tasmania) |
5.0 |
| Darwin (Northern Territory) |
12.0 |
| Canberra (Australian Capital Territory) |
8.4 |
NRAS Incentive
The NRAS Incentive is indexed according to movements in the Rents component of the Housing Group Consumer Price Index for the year, December quarter to December quarter as at 1 March, using the weighted average rate of eight capital cities housing component, and is effective from 1 May. Rents Component - Weighted average of eight capital cities - 8.4% in 2009-10.
Incentive value for 1 May 2009 - 30 April 2010
Current NRAS Year
| Year |
Contributed by |
Amount |
| 2009/2010 |
Australian Government Contribution |
$6 504.00 |
| State/Territory Contribution |
$2 168.00 |
| Total |
$8 672.00 |
Past NRAS years
| Year |
Contributed by |
Amount |
| 2008/2009 |
Australian Government Contribution |
$6 000.00 |
| State/Territory Contribution |
$2 000.00 |
| Total |
$8 000.00 |
Participation by Charities
The Australian Government knows that participation of charitable organisations is important to the success of the National Rental Affordability Scheme, particularly in its early stages, and has provided a transitional safety net to cover charities looking to participate in the Scheme. The amendment to charity and tax laws means that the participation of existing charities in the Establishment Phase of the National Rental Affordability Scheme will not affect their charitable status.
To ensure that charitable tax concessions remain appropriately targeted, the Australian Government considers that the safety net should apply to those charities that make applications for the 11 000 Incentives available in the Establishment Phase of the National Rental Affordability Scheme (projects that will be built in 2008-09 and 2009-10). The safety net will expire at the conclusion of the Establishment Phase.
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Taxation Enquiries
Interested parties with general taxation enquiries about the tax implications of their involvement in NRAS should visit the ATO website or contact the Australian Taxation Office Tax Reform Info Line on 13 24 78, and select Option 4. This call centre operates from 8am-6pm weekdays (AEST).
If a potential applicant or participant would like specific advice on the tax implications of the NRAS arrangement they are entering into, they can seek advice from the Tax Office. Binding advice can be sought in the form of a Private Binding Ruling or a Product Ruling. The links will provide you with further information to determine which type of advice is appropriate for your needs.