National Rental Affordability Scheme
You will likely come across the National Rental Affordability Scheme when you find a property to rent and you find one that is exactly what you are looking for and far cheaper than any other properties that you have been considering, in other words a place to live that is too good to be true.
You may be eligible however, if as of 2021/2022 financial year you are earning $52,795 or $55,530 as a sole parent, $20,198 for each additional adult and $17,514 for each child*. If you think your 26 year old son is a child, the asterix documents that a child is a person under the age of 18 and financial dependent.
The latest release from the Australian Bureau of Statistics in November 2020 lists all employees average total earnings per week as $1,280.30, times this by 52 = $66,575.6 just 21% over the single income no child requirement of the NRAS, but $6,468.40 under the income limit for a sole parent. Existing tenants of the NRAS are allowed a 20% higher limit on income for all household compositions. This 20% figure matches the guideline that the dwellings must be rented out for 20% below the market rates.
Does the NRAS benefit a landlord?
To help assist the property owner in the reduced rental income the annual incentive for a rental dwelling beginning on 1 May 2019 was $8,436.07 (162 per week), this figure is then indexed in accordance with the NRAS incentive index for the next year. The NRAS incentive index is based on a weighted average of the Consumer Price Index posted on the 1st of March the next year, basically, something you cannot plan for.
According to the National Rental Affordability Scheme Regulations 2020 Part 2 Division 1, 6 (1) No further allocations are available under the Scheme on or after 1 April 2020. Interesting choice of date, but this is legislation and not a joke.
Caution for the NRAS
The NRAS began in 2008 and if you received a call in 2014 advising that the scheme was ending and that you were required to pay $300 to remain enlisted, don’t be concerned, this was a scam in the state of Queensland and the scheme carried on, perhaps they just got the date wrong on the call? As advised by the Department of Social Services, investors should be extremely careful before agreeing to pay any funds in respect of a transaction involving the NRAS incentives due to instances of false marketing. Does this kind of lying and deceit always happen when there is such a seemingly beneficial financial incentive in place?
By the time you work out whether you are eligible to rent one of the properties or if the property you are looking to buy is legitimately an NRAS property, the scheme will likely be over. At least now you won’t find the place of your dreams, because the pricing will be back to market price.
DISCLAIMER: May or may not be an NRAS property.