NRAS Property Sales

Take the hard work out of searching for an investment property. NRAS property sales, provides friendly, personalised service, from first time property investors, to experienced property investors, from the beginning through to the end of the process.

The National Rental Affordability Scheme (NRAS) provides properties offering excellent value and a quality real estate investment, which can be superior to traditional property investment with its cash and capital growth return. Individuals, corporations and superannuation funds can purchase NRAS investment properties.




About NRAS

Property For Sale

The National Rental Affordability Scheme is an Australian Government commitment to invest in affordable rental housing. The scheme addresses the shortage of affordable rental housing by offering tax-free financial incentives to investors, so that the dwellings can be rented to low and moderate-income households at below current market rates for a period of 10 years. The aim is to:

• Increase the supply of new affordable rental housing.
• Reduce rental costs for low and moderate, income households.
• Encourage large-scale investment and innovative management of affordable housing.


How does NRAS work?


Under the National Rental Affordability Scheme, investors receive a tax-free incentive per annum, currently $9,981 (indexed annually) for each approved dwelling, rented at 20% below current market rent for a 10-year period. In certain markets, compared with a traditional property investment the tax-free incentive can provide a better cash return than charging the current market rent on the property.

An example below shows the advantage of investing in the NRAS model over standard property investment.




$350.00 (market rent per week)
-$70.00 (20% of market rent per week)
$280.00 (NRAS rent, 20% lower than weekly market rent)
+$192 approx (NRAS incentive reduced to weekly amount)
$472 (rent received with NRAS incentive applied per week)





Who manages the scheme?

The Department of Sustainability, Environment, Water, Population and Communities (SEWPaC) manages the scheme, in consultation with the Australian Taxation Office (ATO). To ensure the objectives are met, the Australian Government work in conjunction with the State and Territory Governments, not-for-profit housing providers, property developers, investors, and financial institutions.



Who is eligible to participate in the scheme?

Potential participants in the scheme include local governments, private developers, investors, financial institutions and not-for-profit organisations, such as, Ethan Affordable Housing. These participants may build, own, finance or manage NRAS dwellings. Individual investors can participate directly in the scheme as part of a consortium, or by investing in entities that participate directly in the NRAS, or other joint venture arrangements. The NRAS Agreement between Ethan Affordable Housing and the investor enables private investors to access the NRAS incentive under Ethan’s approved participant status.



Who are the Approved Participants?

Approved Participants are responsible for lodging applications for the approval of NRAS dwellings, once approved and sold, they are then responsible for the administration of the scheme.

NRAS Property Sales selected Ethan Affordable Housing as the Approved Participant to partner with in delivering NRAS investment properties to clients.



Who is Ethan Affordable Housing?

Ethan Affordable Housing is a not-for-profit housing provider that promotes the relief of rental stress for individuals and families in Australia. It specialises in creating ethical and sustainable business models that also contribute to the social fabric of the community.

Ethan currently works with the Government to successfully deliver the required outcomes of the NRAS and to ensure the program is operating in accordance with the relevant legislation. In partnering with the Government they obtain assistance and subsidies to offset and fund privately held property portfolios that are made available for affordable housing.

They have extensive experience in both property and tenancy management together with a significant background in the development of both small to large–scale residential developments.



Who benefits from NRAS?


NRAS presents a profitable investment opportunity for investors while also increasing the supply of affordable housing in Australia. NRAS is not a public housing scheme or welfare program. It is designed to target normal working individuals and families.

NRAS is a tax free incentive to encourage socially responsible investing, to provide affordable rental housing for qualifying key workers, such as, childcare workers, police officers, teachers, fire fighters, nurses and paramedics. Eligible individuals and families will be able to rent NRAS properties at 20% below market rates, making their housing more affordable.

A win-win scenario, both for the investor and for members of Australia’s key infrastructure workforce.



Income levels for NRAS tenants

Income thresholds are identified in the NRAS guidelines LINK and range from; the initial income limit of $44,128 for a single to $104,913 for a couple with three children. These limits are indexed annually on 1st 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 a NRAS dwelling but can earn up to 25% above the entry-level threshold and continue to remain eligible within the requirements of the scheme for a further 2 years. Approximately 1.5 million households are eligible to rent NRAS properties.



NRAS Investment Properties

The properties are constructed by various developers across Australia and sold to investors, on the basis that they are approved under the scheme and that they will participate in the Ethan model.

NRAS property options include house and land packages, townhouses, units and apartments. The properties are located in potential high growth areas, with a strong rental demand or an under supply of rental stock. To qualify in the scheme the dwellings must be brand new, self contained, and built to the highest standards, and are indistinguishable from equivalent properties in the market. They need to comply with Local Government, State and Territory, planning, building codes and requirements.

Under the Ethan model, all of the properties have extra inclusions, referred to as ‘turn key’ inclusions, which are in addition to the standard building contract inclusions. This is not only beneficial to the tenant but also to the investor, ensuring the dwelling will be ready to be occupied by the tenant immediately upon completion. The tenant has to just literally, turn the key and move in. ‘Turn Key’ inclusions, such as, land scaping to the front and rear of the dwelling, window blinds, TV antenna, clothesline, letterbox, ducted evaporative air conditioning and dishwasher, to name a few. For a comprehensive list refer to FAQ, ‘What are turn key inclusions?’

There are opportunities to purchase the end product prior to the construction process commencing. The benefit to the investor can be obtained by the reduced stamp duty payable, as the duty is payable on the value of the property at time of purchase which would only be on the land component. There can be other advantages for the investor, such as, discounts that the developer is prepared to give to the investor for purchasing early in the project.



Returns on NRAS investment properties compared to conventional investment properties

NRAS presents an investment opportunity in the Australian market that is intended as a commercial, profitable investment for participants while also increasing the supply of affordable housing.

The annual National Rental Incentive is income that is tax-free and complimented by existing taxation arrangements, including tax deductions on property depreciation and interest payments.

NRAS investment properties include potential negative gearing benefits and positive cash flow at the same time. There are possibilities of reducing your tax burden; increasing the negative gearing benefit by applying expenses and non-cash deductions and allowances against a lower assessable renal income as the property is rented at 80% of the current market rate. In certain markets, reducing the market rent by 20% on a NRAS dwelling, the addition of the tax-free incentive can provide a better cash return to the investor than charging the current market rent.

A positive cash flow investment property means investors may not have to adjust their current life style and still receive the benefits of increased income and the potential, investment earnings as the property increases in value.



Rental Management

It is essential that your NRAS property be managed in a professional manner not only to protect your investment but also to meet the requirements of the scheme.

Upon completion of the dwelling and after settlement of the property, it is now ready for occupancy and the appointed property manager can now find an eligible tenant. To meet the requirements of the scheme the property must be leased out at 20% below the market rental value. For example, if the market rent is $350 per week, after applying the NRAS rent discount of 20% it would be reduced to $280 per week. Not only providing affordable rental housing for Australia’s key infrastructure workforce, but possible reduced vacancy rates over the 10 years, due to the dwellings rented at 20% below market rates making the property most sought after by tenants.

Under the scheme there are additional requirements to ensure that the tenants qualify. The property manager must investigate and establish the income of the applicant, prepare and submit a new tenancy file, provide an end of the year NRAS summary and repeat the eligibility testing on an annual basis.

Apart from the additional NRAS requirements the property management services are the same as for conventional rental properties. These activities include tenant selection, rent collection, periodic inspections and property maintenance, as well as, all other duties required of a property manager within an agency. The property manager deals directly with the investor on maintenance and tenancy matters and pays the rent directly to the investor.

The agreement between the investor and the agency will be documented on the state specific Real Estate Institutes property management agreement for the term of the NRAS incentive. Ethan suggests an appropriate property management fee for a rental manager to charge for their services to professionally lease and manage the NRAS investment property is 10% of the discounted rent. Average management fees are approximately 8% therefore by offering 10% the property managers will not be disadvantaged due to the reduced market rent of a NRAS property. NRAS requires that tenancy management services comply with the residential tenancy legislation and regulations relevant to each State or Territory.

We can provide assistance for your property management needs so that the most appropriate agency is coordinated for the rental management of your NRAS investment property. Ethan Affordable Housing is a not-for-profit housing provider that currently works with the government to successfully deliver the required outcomes of the NRAS and to ensure the program is operating in accordance with the legislation. They work with selected local real estate agencies that have undertaken appropriate training, and have an understanding of the scheme. They will help you locate one of these in your relevant area.

If you would prefer your own property manager, they will need to meet the government’s requirements, as detailed above. This is to ensure that the property is managed in a professional manner and complies with the requirements of the NRAS so that your investment property remains eligible for the entire 10 years, and your investment’s returns are maximised.



How is the market rent determined?

The rental manager will also need to organise on your behalf an independent market rent valuation required for the property to be part of the NRAS in the first year, and a further two valuations over the 10 year period, in years four and seven. This is to allow for the rent to be increased periodically, as well as the rent being adjusted yearly.
It is important for the property to be managed in accordance with the schemes requirements otherwise it could affect the investor being eligible for the incentive. Ethan have put policies and procedures in place in conjunction with the rental managers to ensure the properties remain eligible and are managed in accordance with government requirements.



NRAS audit process

Ethan Affordable Housing is also responsible for the annual auditing of each property, which must be completed before the incentive is paid to the investor. The cost of the audit is 7.5% of the incentive per annum, currently $748.58+GST.




As with any property investment there are associated expenses associated with owning the property. Some of the expenses to consider depending on the particular property and state are; interest and bank charges if borrowing from a Financial Institution, conveyancing, stamp duty, management fees, landlord insurance, land tax, depreciation report, council rates, water, strata fees (if applicable), and maintenance.
An additional cost is an independent market rent valuation required for the property to be part of the NRAS in the first year, and a further two valuations over the 10 year period, in years four and seven. This is to allow for the rent to be increased periodically, as well as the rent being adjusted yearly. Your rental manager can organize this.

As with any investment, it is recommended that you seek professional financial or legal advice to ensure any investment you undertake is suitable to your individual needs and circumstances.