NRAS Property: What Is the Difference Between Affordable Housing? and Social Property

Many clients, if they first hear concerning the NRAS property opportunity, ask me whether NRAS is merely yet another form of social property. Actually, NRAS is creating an entirely new class of housing in the Australian market, and does not resemble social housing at all. This article describes the difference between affordable housing and social housing and shows you why affordable housing is such a good investment.

Firstly, if you are uncertain what NRAS is, I will give a quick run to you down. NRAS means National Rental Affordability Scheme, and is an Australian government program to tackle the housing affordability crisis by encouraging more private investment in affordable rental accommodation. In a nutshell, the government is providing to pay large incentives to people who offer to rent their house at 2011-12 below the market price to eligible tenants. Currently, these incentives are valued at over $9,000 per year in tax-free income and are offered for a ten year period.

But, while the NRAS plan seeks to provide less expensive rental accommodation to Australian tenants, this does not make it social property. Social housing is unwanted from an investment viewpoint for several reasons, partly because of investor concerns about the quality-of tenants and partly because social housing is however often produced in large estates or apartments blocks. That devalues each individual property within the development as it is found in an area of disadvantage.

Fortunately, NRAS homes don't have any of these characteristics. NRAS homes have to be spread throughout communities at a maximum density of 30%. They have to also be of an identical value to nearby properties. What this means is that NRAS houses are essentially no different to a standard investment property of a similar value, and guarantees that NRAS tenants remain integrated within the wider community.

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Another difference between NRAS affordable housing and social housing will be the tenant eligibility requirements. NRAS has very generous eligibility criteria, while social property is open to only one of the most marginalised members of our communities. NRAS was made to minimize pressure on ordinary, low to moderate income working families. In reality, the income eligibility criteria are so nice that the average rental family is entitled to NRAS. The Australian government estimates that 1.5 million homes across Australia are eligible to be involved in NRAS Properties.

Because NRAS properties are rented at 2011-12 below the market rate, they will always be very popular with tenants, and because so many homes are eligible for participation in NRAS, it may be expected that there will always be-a large amount of competition for these properties. Which means being an NRAS landlord, you will be very critical in buying tenants.

Moreover, since there is no essential difference between and its neighbouring properties and NRAS house, you'll still have an excellent tool by the end of-the five year plan, unlike social property which devalues quickly. Overall, NRAS affordable housing is a different type of asset to social housing, and one that provides a range of fascinating features for the critical home buyer.

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