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What is NRAS?
NRAS Stands for the National Rental Affordability Scheme.
This is a Government Scheme which was launched in July 2008 with bipartisan support and with the cooperation of Federal and State Governments.
NRAS was introduced to support semi professional individuals and families to be able to afford rental accommodation closer to their places of employment. At the same time it provides incentives to investors to establish more rental premises to offset the well publicised housing shortage.
The shortage in the housing market was 85,000 dwellings in 2008 ~ with a projected shortage of 213,000 dwellings by 2013. NRAS targeted delivery of 50,000 additional subsidised rental dwellings by 2013.
The Scheme provides significant annual rebates (nearly $10K currently) to investors on the provision that they make rental properties available to approved tenants at a discounted rental at least 20% below market rent.
Management of NRAS allocations and ongoing management of NRAS properties during their 10-year life cycle in the Scheme has been delegated by the Government to roughly a dozen Consortiums - referred to by the Government as approved 'Participants'.
This is only a brief summary of the Scheme. For more detail please review the Government's Guide to NRAS, which can be downloaded by clicking the image to the right of this screen.
The Lending Environment
As with most new Schemes or initiatives, the major lenders in Australia were very slow to come to grips with how best to support investors who wish to participate in the National Rental Affordability Scheme, despite the fact that it has broad political and community support.
One of the reasons for this is that well paid Bank Executives failed to take the time to understand the difference between "social housing" and "affordable housing" or to concern themselves with the needs of honest hardworking Australians who make up the majority of 'middle Australia'. The types of tenants that qualify for NRAS properties include police officers, teachers, fire personnel, nurses and a range of other essential occupations in our community.
Thankfully, however, the lending landscape is now a little more mature and NRAS Loans has been able to assist many lenders to understand the true nature of the 'risks' involved in lending for these investments.
That said, people wishing to borrow for NRAS property investments should anticipate the following:
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The range of loans and competition among lenders is significantly less than for normal home loans or residential investment property loans
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Not all Lenders offer NRAS loans
- Each Lender that does offer NRAS loans has come up with widely varying parameters
- No single Lender has thus far approved all Consortiums ~ some have approved only one or a handful
- The chances of finding someone at your local Branch who is a NRAS expert are extremely low
- Therefore, it is a good idea to ensure that you seek assistance from a specialist Broker such as NRAS Loans who has developed an intrinsic understanding of the subtleties of each investors scenario
Important Note: While many investors and their professional advisers feel that investing in a NRAS property via a Self Managed Superannuation Fund (SMSF) makes significant sense ~ the availability of loans for NRAS inside SMSF is extremely low at present. This is a highly technical and complex form of lending solution given that it involves both NRAS technicalities and nuances plus the complexities of SMSF borrowing.
For this reason we would encourage you to utilise the services of SMSF Loans* who are undeniably Australia's most competent and respected specialists in SMSF lending.
* NRAS Loans and SMSF Loans are related entities.
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