NRAS Investment Property PROFESSIONAL INFORMATION PACK · NRAS National Rental Affordability Scheme INTRODUCTION “Both payments are classified as “Tax Offsets” for the applicable
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NRAS is a Federal and State Government backed incentive scheme launched in 2008 which is designed to:
• encourage investors to develop additional new houses for the rental market.
• provide an affordable rent program for average Australian wage earners as individuals, couples and families. It is not social housing.
• yield higher than usual returns for investors in the residential property market.
• increase the number of rental dwellings built through the stimulation of demand and investment, while supporting the building industry and related jobs and the Australian economy.
$623 MILLION GOVERNMENT INVESTMENT
The NRAS program is providing “tax free incentives” to institutional and private investors for the purchase / construction of 50,000 new rental dwellings between January 2009 and June 2012. A budget of $623 million dollars has been allocated to achieve this objective.
These dwellings, ranging from unit and townhouse developments to house and land packages, have and are being constructed in locations with high population growth with adequate support infrastructure such as schools, hospitals and job growth to ensure long term tenants. The Government has identified 1.5 million households nationally and 200,000 in Queensland in housing stress that are eligible for the NRAS program. The majority of these are “middle Australia” families, some with household incomes in excess of $100,000 per annum. They pay rents calculated at 25% less than the regular market rental. To compensate the investor owners of these properties, an incentive is paid at the end of each tax year in two parts.
1. $6,855 (75%) is paid as a tax credit from the Federal Government in July each year.
2. $2,285 (25%) cash is paid by the State Government in May each year.
TOTAL = $9,140 Tax Incentive!
NRASNational Rental Affordability Scheme
I N T R O D U C T I O N
“Both payments are classified as “Tax Offsets” for the applicable financial
year. A letter from the Australian Taxation Office
Both payments are indexed to the housing cost component of the CPI and the annual incentive is paid for 10 years while the property is retained within the NRAS program. The housing cost component of CPI rose by 8.1% in 2009 and 5.4% in 2010, both well ahead of the overall CPI figures for the period.
$91,000 PLUS TAX OFFSET OVER 10 YEARS
The Government’s incentive payment amounts to in excess of $91,000 over the ten year period. More than 20% of the purchase price of the NRAS properties available for sale. The Tax Offset applies to owner investors as individuals, corporate tax entities or as superannuation funds.”
NET CASHFLOW - WEEKLY
TENANTS FOUND FOR INVESTORS
NRAS approved properties are “managed” by Government approved management groups who hold the head lease on the properties and who are responsible for the placing of suitably qualified tenants and the management and maintenance of the properties. In the event of a tenant family leaving the property, the manager’s task is to recruit new tenants from the qualified list.
APPROVED PROPERTIES IN HIGH POPULATION AND GROWTH AREAS
NRAS properties are situated in high population and growth areas identified by the Housing Department and the NRAS organisation. This ensures that a high demand for rental opportunities is in place so that NRAS properties will remain fully tenanted. NRAS approved properties for families are all situated in areas where suitable infrastructure such as schools and hospitals are in place or under construction.
Over 10 Years!
Income $300k $350k $380k $400k $420k
$50,000 +$32 +$0 $16 $27 - $44
$60,000 +$58 +$30 +$12 +$2 - $15
$70,000 +$58 +$32 +$20 +$11 - $2
$80,000 +$58 +$32 +$20 +$11 - $2
$90,000 +$77 +$51 +$39 +$31 +$17
$100,000 +$97 +$70 +$59 +$50 +$36
$110,000 +$106 +$84 +$75 +$68 +$55
Assuming;
• $9,140 incentive
• interest rate 6.81%
• 100% borrow
• market rent less 25%
• all expenses, rent, interest and depreciation price included
Four major Financial Institutions have approved investment finance loans for NRAS properties available through the QAHC. (Queensland Affordable Housing Corporation) following their due diligence process. Details are available from Brisbane Property Brokers (Aus) and strategic partner organisations.
QUEENSLAND AFFORDABLE HOUSING CONSORTIUM
The NRAS program in Queensland is administered and managed by the Queensland Affordable Housing Consortium (QAHC). The QAHC is a not for profit organisation formed for that purpose.
The QAHC hold the head lease on NRAS properties and are responsible for tenanting the properties, collecting and disbursing the rent and for facilitating the payment of the Tax credit and cash rebates to NRAS property owners.
NRAS approvals for over 2,400 dwellings in Queensland have already been received and applications have been lodged for a further 3,000 dwellings in NRAS Round 3 & 4.
HIGH QUALITY CONSTRUCTION & FINISH
In order to qualify for the scheme NRAS approved properties have to meet or exceed strict construction and finish standard Government guidelines. When construction is complete all properties are subject to inspection and only signed off when they have met all requirements. Investors can therefore be confident that the NRAS property they buy is good value and will stand the test of time.
(FaHCSIA) assesses properties for NRASendorsement. When endorsed the result is an
annual tax free rental subsidy paid to theproperty owner as tax certificates (effectively
tax free income) at the end of each year.
Queensland Affordable HousingConsortium
A Registered Charity – has made applications on behalf of Property Owners & Developers to the Department ofFamilies Housing Community Services & Indigenous Affairs (FaHCSIA) for National Rent Affordability Scheme (NRAS) endorsement for various properties.
Federal requirements relating to volume and operational factors make QAHC an ideal applicant to the Federal Government.QAHC has already had properties NRAS endorsed in Queensland.
$9,140
$6,855 from theFederal
Government
$2,285 from theState
Government
As the Approved Applicant, QAHC acts as administrator and puts in place management
systems to collect and disperse the subsidy and manage the Property for the Investor.
BPBA
Brisbane Property Brokers (Aus) (BPBA) identified several Developers who were well placed to provide suitable stock to QAHC to use to apply for the NRAS endorsement.
BPBA is now offering that stock toInvestors for purchase subject to theNRAS.
THE INVESTOR
1. The Investor Buys the NRAS endorsedproperty.
2. The Investor enters into a 10 yr head lease with QAHC who then appoints the property’s manager.
3. QAHC has established a Very Low Risk, Secure Income Stream for owners via insurances and management systems.
4. QAHC arranges the tax certificates from the Federal and State Governments to be issued to the investor annually.
NOTE: Further and more detailed explanations can be found at: www.qahc.asn.auwww.brisproperty.com.au
HOW DOES NRAS WORK FOR THE INVESTOR
The roles of Brisbane Property Brokers (Aus) andThe Queensland Affordable Housing Consortium
Brisbane Property Brokers (Aus) are “Strategic Partners” of the QAHC and have the biggest and most diverse range of NRAS developments in Queensland and Australia.
Brisbane Property Brokers (Aus) has been in existence for over ten years and specialise in the sales and management of investment properties. They have been involved with the NRAS program since inception and undertake a coordinating role between property developers, the QAHC, Financial Planners, Mortgage Brokers and specialist real estate agencies nationally.
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