Mackay investors confused about NRAS benefits
Mackay property expert Kim Clarke says that despite the National Rental Affordability Scheme (NRAS) gaining traction in Mackay, many residents remain confused around what the private investment incentive offers. As a result the developer of Mackay’s Plantation Palms is proactively educating potential investors through an information event to be hosted in October.
NRAS is a long term commitment by the Australian Government to stimulate private investment into the low-priced residential property market. The tax incentive not only provides an opportunity for private ‘mum and dad’ purchasers and businesses to get their foot onto the investment ladder, but also addresses the issue of an affordable rental housing shortage.
Kim, Xcel Properties Managing Director and developer of Mackay’s Plantation Palms, says the scheme’s minimum risk is also a main driver for first-time investors. “Affordable rental properties in Mackay have been scarce for the past 10 years, which guarantees demand for these properties,” says Kim.
Incentive from NRAS is received in the form of an annual tax refund offset from the Australian Government. This is set at $7,762.50 per dwelling in line with the property being rented for 10 years at a rate at least 20 per cent below market value. Queensland investors receive an additional cash payment of $2,587 per dwelling directly from the State Government, totalling the incentive to over $10,000.
Despite the obvious advantages of the scheme, Kim says there are still areas of confusion and misconceptions around what this incentive offers. “We’ve recently received an influx of potential investors enquiring about further education, especially around topics such as who will be living in their home, and who will be controlling their investment. As a major developer of affordable housing in the Northern Beaches area we have a responsibility to provide these potential investors with sound advice that helps support their decision.”
As discussions around the potential to take up the incentive build, Kim has noted a number of misconceptions around what the scheme actually offers.
Kim clarifies the top five NRAS misconceptions:
- Misconception: NRAS properties are used for social housing.
Truth: These affordable rental dwellings are private property and the investor/owner has complete control over who occupies their property. A couple with three children can earn $109,264 pa (rising to $136,580) and still qualify to rent.
- Misconception: NRAS investors are large business groups only.
Truth: Potential participants in NRAS include everyone from ‘mum and dad’ investors, financial institutions, non-profit organisations, private developers, and community housing providers.
- Misconception: NRAS property schemes are operated by government.
Truth: Although the NRAS is an initiative funded by the Australian Government, it is an approved scheme operator that puts the operating agreement in place between them and individual investors. This can vary widely and investors are encouraged to thoroughly review the provisions contained in their agreement and seek help from a professional before finalising an investment.
- Misconception: Tenancy conditions change when it comes to NRAS renters.
Truth: NRAS homes may be funded by the incentive for up to a period of 10 years and tenants are entitled to the same rights given as tenants of relevant residential tenancy law in their respective State or Territory.
- Misconception: Grant payments remain unchanged despite increased rental value.
Truth: The NRAS incentive is paid per dwelling, and is indexed each year (Dec – Dec) in line with movements of the Rents component of the Consumer Price Index. This is calculated using the weighted average rate of the eight capital cities housing component, and is effective from 1 May 2013.
Plantation Palms has joined forces with Mackay Regional Housing Company to host an NRAS information event on 23 October 2013. The non-obligatory event will provide both individual investors and companies with unbiased information around the scheme and will feature presentations from Mackay Regional Housing Company, Plantation Palms and NRAS Builders.
The NRAS information event will take place at Plantation Palms Head Office, 3 Montgomery Street, Rural View, QLD 4740. Spaces will be limited therefore please register attendance at plantationpalms.com.au before 18 October 2013 to secure your spot.