NRAS Grant

 The National Rental Affordability Scheme (NRAS) is a long term commitment by the Australian Government to invest in affordable rental housing.

The Scheme seeks to address the shortage of affordable rental housing by offering financial incentives to the business sector and community organisations to build and rent dwellings to low and moderate income households at 20 per cent below-market rates for 10 years. NRAS aims to:

  • increase the supply of new affordable rental housing;
  • reduce rental costs for low and moderate income households; and
  • encourage large scale investment and innovative delivery of affordable housing.

The Australian Government has committed $1 billion to the Scheme over four years to stimulate construction of up to 50,000 high quality homes and apartments, providing affordable private rental properties for Australians and their families.


This is a great opportunity for property investors to have a property in a high capital growth area but still receive the positive cash flow provided by the generous government grants. I believe this is a small window of opportunity where a property investor can build their asset base with no need to take a hit on their cash flow, in actual fact you will increase your cash flow position.

Please read the below information supplied from website and click here to see any available NRAS properties.

What do investors get?

NRAS offers a substantial annual tax-free incentive, the NRAS Incentive, for every dwelling built under its auspices.

Investors need to apply for NRAS Incentives, and if offered, must agree to rent approved dwellings at 20 per cent or more below current market rates, to low and moderate income households.

The NRAS Incentive is a funding stream not available to standard residential property investors.  Each approved dwelling attracts the NRAS Incentive for 10 years, so long as investors continue to comply with conditions around tenant eligibility and rent discounts.

The annual income-tax free Incentive is currently $9,524 per dwelling, and is indexed each year to the rental component of the CPI.  The Incentive comprises:

  • an Australian Government contribution of $7,143 per dwelling per year (as a refundable tax offset or payment); and
  • a State or Territory Government contribution of $2,381 per dwelling per year (in direct or in-kind financial support).
  • The Incentive provided under the Scheme assists investors and property developers to work up proposals that offer an attractive and competitive rate of return.

The Government is committed to ensuring that the full value of the NRAS Incentive is passed to all investors. Prospective investors are encouraged to talk to the Australian Tax Office before finalising their investment structure or applying for NRAS Incentives, to ensure this policy objective is achieved.

The Australian Government has no legal or equitable claim over an NRAS property.

Benefits of investing in NRAS

NRAS investors can expect to benefit from the annual NRAS Incentive, rental yields and capital gain.

NRAS is intended to be a commercial, profitable investment for participants, while also assisting Australia to increase the supply of affordable housing.

With returns on direct residential property proving higher than returns on office or industrial property over the last 10 years, residential property has proven a profitable investment.

While house prices have fallen substantially globally, the Australian housing sector has shown resilience, primarily due to strong fundamentals – vacancy rates, high population growth, insufficient housing stock, high employment and sound lending practices.

Demand for residential property is high with the National Housing Supply Council’s State of Supply Report 2010 estimating a current housing supply deficit of 178,400 homes across Australia.

Partly due to the shortfall in supply, the residential rental market represents a good long-term investment.  Independent financial modeling of the NRAS Incentive shows that it can provide market rates of return at levels that are strongly competitive with other asset classes.

Compared with a conventional residential investment property, in certain markets the NRAS Incentive can provide a better cash return to investors than the receipt of full market rent.

In addition, investors are able to apply property expenses and non-cash deductions and allowances against a lower assessable rental income, increasing the negative gearing benefit.

NRAS can counterbalance the risk and volatility of equity markets and assist in providing a balanced portfolio.  It offers great flexibility, with investors encouraged to develop portfolios with diverse dwelling types across different locations.

With more than 1.5 million households eligible to rent NRAS properties, the vacancy risk is negligible.”

Some people are concerned that the NRAS scheme may attract problem tenants but the scheme is not aimed at low income housing but affordable housing. Please check out the figures below for what the criteria is to be eligible to participate in a NRAS property.

NRAS tenants

NRAS tenants tend to be key workers, such as childcare workers, nurses, police officers, fire-fighters and paramedics.  Approximately 1.5 million households are currently eligible to rent NRAS properties.

Investors can pick any tenants for NRAS properties, as long as these tenants do not exceed a certain income threshold.

Income levels for eligible NRAS tenants are generous and allow for tenant salary increases of 25 per cent above the entry income limit.

For example, a couple with three children, earning a gross income of $100,768 per annum, is eligible to rent an NRAS dwelling.  With the income increase allowance of 25 per cent, this family could earn up to $125,960 for two years before they become ineligible to remain in an NRAS property. Scroll down to see the income figures.


Household Type Entry income level ($) Upper income level to maintain eligibility ($)
Single person 42,386 52,983
Two adults 58,596 73,246
Sole parent with 1 child 58,638 73,298
Sole parent with 2 children 72,695 90,869
Couple with 1 child 72,653 90,817
Couple with 2 children 86,710 108,388
Couple with 3 children 100,768 125,960


All information is from 2010

And lastly some key facts about NRAS

Key facts about NRAS

  • NRAS dwellings are private property. No Government holds caveats or claims over NRAS properties.
  • NRAS homes can be bundled with non-NRAS properties: they may be only a minority of a new multi-story development, with other properties sold off-the-plan to homebuyers and individual investors.
  • NRAS dwellings can be sold without penalty during the 10 year holding period:
  • a dwelling can be sold to another investor who undertakes to comply with NRAS obligations; or
  • an equivalent dwelling can be offered as a substitute dwelling for the remaining part of the 10-year period.
  • At the end of the NRAS 10 year period, properties revert to full control of the investor, who has no ongoing obligations to 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.
  • The Australian Government has made a 10 year commitment to NRAS.  The Scheme is managed and regulated under the legislative framework provided through the National Rental Affordability Scheme Act 2008.

AssetZ has access to specific high growth areas with NRAS grants already approved on them, to find out more click here or call us on 1300 AssetZ

We look forward to helping you buy your first NRAS property.

© AssetZ Group of Companies all rights reserved.

Advice Warning
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.