National Rental Affordability Scheme (NRAS)

Information for NRAS Participants

What is NRAS?

The National Rental Affordability Scheme (NRAS or the Scheme) is an Australian Government initiative, delivered in partnership with the States and Territories, to stimulate the supply of new affordable, privately-owned rental dwellings..

NRAS seeks to address the shortage of affordable rental housing across the nation by offering financial incentives to the business sector and community organisations to build and rent dwellings to low and moderate income households at a rate that is at least 20 per cent below market value rent.

NRAS dwellings are not social or public housing — they are affordable private rental homes. The Australian Government does not hold caveats or claims over NRAS properties.

Dwellings range from studio apartments right through to family homes, and are located where affordable rental accommodation is most needed, especially in areas where employment, schools and other services are available nearby.

NRAS Incentive

Successful NRAS applicants, known as approved participants, are able to receive an annual financial incentive for each approved dwelling. To be eligible for the financial incentive, approved dwellings must be rented to eligible low and moderate income households at levels at least 20 per cent below market value rent.

There are two components to the incentive payment:

  • The Australian Government provides its component as a cash payment (for charitable institutions) or a tax offset.
  • State and Territory governments may offer approved participants a contribution per dwelling as direct payment or payment in-kind.

The NRAS Incentive is indexed according to movements in the Rents component of the Housing Group Consumer Price Index for the year, December quarter to December quarter as at 1 March, using the weighted average rate of eight capital cities housing component, and is effective from 1 May each year.

Calls for Applications (NRAS Rounds)

From time to time the Department may make a call for applications for allocations of incentives under the NRAS. Successful applicants become NRAS approved participants.

Under a call for applications, a set of assessment criteria is specified and applicants must provide an application addressing these criteria, against which they will be competitively assessed for suitability by both the Australian Government and the relevant state or territory government.

Requirements for NRAS dwellings

NRAS approved dwellings must conform to state and territory building requirements, including minimum 5 star energy ratings.

Applications are also assessed on the dwellings’ design features which reduce the overall costs to tenants, for example through maximising energy efficiency and providing a comfortable environment with reduced running and infrastructure costs.

At the end of the 10-year NRAS incentive period the Australian Government will cease to provide incentives.

Mandatory requirements

To remain entitled under the Scheme, approved participants must satisfy conditions of allocation as specified in the relevant NRAS legislation, regulations and guidelines. The approved dwellings must:

  • comply with State, Territory and local government planning and building laws
  • be rented to eligible tenants
  • be rented at a rate that is at least 20 per cent below market value rent
  • not have been lived in as a residence before, or
  • not have been lived in as a residence since having been made fit for occupancy where previously the dwelling was recognised as being uninhabitable,or
  • not have been lived in as a separate residence if it has been converted to create additional residences.

State and Territory requirements

States and Territories also have specific criteria for participants as part of the application process, including priority locations.

For information which specifically relates to State/Territory affordable housing priorities (including planning and building requirements) visit the relevant State and Territory government websites.

Indexation and Rent Increases

An independent written valuation of the market value rent is required for each dwelling when it first becomes available for rent under the NRAS and at the end of the fourth and seventh years of the approved rental dwelling's 10 year incentive period. Properties must be rented at a rate that is at least 20 per cent below the market value rent.

Rents can be reviewed upon entering into a new lease or at 12 month intervals under an existing lease. Rents can be increased following a rent review, but only where:

  • comparative information and data, where available, supports the rent increase
  • the proposed increase does not exceed the movement in the NRAS market index (the Rents component of the Housing Group of the CPI)
  • the proposed increase is consistent with any State or Territory landlord and tenancy laws
  • the proposed increase will not result in the rent exceeding 80 per cent of the market value rent as established by the most recent market rent valuation.

State / Territory Market Index percentile increases 1May2014 to 30April2015

Jurisdiction / Percentage change from corresponding quarter of previous year– Dec 2013
Sydney / New South Wales / 3.4
Melbourne / Victoria / 2.0
Brisbane / Queensland / 2.1
Adelaide / South Australia / 2.4
Perth / Western Australia / 5.8
Hobart / Tasmania / 1.0
Darwin / Northern Territory / 8.4
Canberra / Australian Capital Territory / 0.4

State / Territory Market Index Percentile Increase for Previous Years

Jurisdiction / Percentage change from corresponding quarter of previous year – Dec 2012
Sydney / New South Wales / 4.4
Melbourne / Victoria / 2.5
Brisbane / Queensland / 2.7
Adelaide / South Australia / 2.5
Perth / Western Australia / 6.5
Hobart / Tasmania / 1.7
Darwin / Northern Territory / 4.2
Canberra / Australian Capital Territory / 3.1
Housing Group CPI by capital city for NRAS year
1 May 2012 to 30 April 2013 / Percentage Increase %
Sydney / 6.3
Brisbane / 2.9
Perth / 3.9
Hobart / 3.4
Canberra / 6.4
Melbourne / 4.0
Adelaide / 4.2
Darwin / 1.6
Housing Group CPI by capital city for NRAS year
1 May 2011 to 30 April 2012 / Percentage Increase %
Sydney / 5.0
Brisbane / 2.9
Perth / 3.3
Hobart / 3.6
Canberra / 4.8
Melbourne / 3.8
Adelaide / 4.4
Darwin / 6.0
Housing Group CPI by capital city for NRAS year
1 May 2010 to 30 April 2011 / Percentage Increase %
Sydney / 5.7
Brisbane / 4.9
Perth / 6.0
Hobart / 4.6
Canberra / 4.2
Melbourne / 4.8
Adelaide / 4.0
Darwin / 10.6
Housing Group CPI by capital city for NRAS year
1 May 2009 to 30 April 2010 / Percentage Increase %
Sydney / 8.0
Brisbane / 10.1
Perth / 12.2
Hobart / 5.0
Canberra / 8.4
Melbourne / 6.6
Adelaide / 5.4
Darwin / 12.0

NOTE: The table above covers the first year in which NRAS rents could be raised since the scheme commenced.

Tenancy Management

NRAS approved participants may contract a service provider to manage dwellings on their behalf, or a tenancy manager could form part of the consortium which makes the NRAS application. An approved participant may also undertake the tenancy management role itself.

Tenancy managers for NRAS may be not-for-profit organisations or commercial businesses such as real estate agents or NRAS approved participants.

Tenancy managers may perform functions such as:

  • assessing tenant eligibility and retaining tenant records
  • managing determination of market and NRAS rents
  • providing property management and maintenance functions
  • managing the ongoing tenancy of the NRAS dwellings
  • reporting compliance with tenant eligibility, rent levels and other regulatory compliance requirements
  • retaining tenancy compliance records for at least 5years
  • operating under the residential tenancy legislation and relevant tenancy and property management regulations in the State or Territory where the dwelling is located. In some jurisdictions tenancy managers may need to hold a real-estate license.

The Australian Government does not select tenants or maintain a waiting list for homes supported by NRAS. This is done by the approved participant for each dwelling, apart from in Queensland, where tenants are selected from the Queensland Government’s One Social Housing Register. Assessment and selection of tenants is at the discretion of the approved participant. As long as NRAS eligibility requirements are met, tenancy decisions can be made in line with their usual policies and processes.

NRAS does not provide tenants with any special rights over and above the residential tenancy legislation or regulations of the relevant State or Territory, but participants are encouraged to provide longer leases to improve security of tenure for tenants.

NRAS participants should note that failure by a third party engaged as a tenancy manager to comply with the requirements of the Scheme may impact on their right to receive an incentive and may result in an allocation being revoked if the conditions of the allocation are not met.

Tenant Eligibility

Dwellings must be rented to eligible tenants. The household income limits for eligible tenants are specified in the NRAS Regulations.

Initial tenant income levels are assessed against gross household income limits according to the household composition. For NRAS purposes, a household is considered to be all persons ordinarily residing in the home. All persons who ordinarily reside in an NRAS approved dwelling must have their income included as a member of the household.

A household’s gross income for the 12 months prior to commencement of tenancy must be equal to or less than the relevant income limit for the household’s composition. Household income may then increase above the income limit. However, existing tenants will cease to be eligible if their household income exceeds the applicable household income by 25 per cent or more in two consecutive eligibility years.

Assessment of household income is based on the gross household income for the 12 months prior to the day on which the household becomes NRAS tenants. All steps should be taken to accurately determine household income, for example, sighting the following documents:

  • Copies of payslips
  • Notices of assessment of annual income tax returns
  • Statements from superannuation funds
  • Statements from Centrelink
  • Statements from dividends or rents paid
  • Statements from parents to indicate the level of financial support provided.

Each year, household income limits are indexed against percentage changes of the All Groups Component of the Consumer Price Index so that the limits effectively maintain the same target group of tenants over the life of the Scheme.

Eligibility for NRAS Incentives

Approved participants need to undertake a range ofcompliance activities, including:

  • using the DSS dwelling record system
  • notifying of any proposed variations or delays in dwelling construction
  • seeking and obtaining approval for formal variations where dwellings may not be completed within agreed timeframes
  • undertaking and reporting on tenant demographic statistics
  • compliance with all conditions of allocation and lodgement of an annual Statement of Compliance. Compliance is essential in order to receive the NRAS incentive.

NRAS related taxation issues

The Federal Government incentive may be made in the form of a tax offset certificate. For information on NRAS refundable tax offsets and other taxation issues, visit the Australian Taxation Office website (

Managed Investment schemes

NRAS approved participants will need to obtain legal advice as to whether they are subject to the provisions of the Corporations Act 2001 when dealing with managed investment schemes.

If an approved participant is operating a managed investment scheme that is required to be registered, then the participant will need to either:

  • comply with the relevant provisions under the Corporations Act 2001, including:

—registering the scheme with the Australian Securities and Investments Commission (ASIC)

—preparing any necessary disclosure material

—holding an appropriate Australian financial services license

  • apply for relief from ASIC from the relevant provisions of the Corporations Act 2001.

Legislation, regulations and guidelines

The legislative framework for the scheme is provided through the National Rental Affordability Scheme Act 2008, the Income Tax Assessment Act 1997 and the National Rental Affordability Scheme Regulations 2008.

NRAS Policy Guidelines

The National Rental Affordability Scheme Policy Guidelines provide details of the administration of the National Rental Affordability Scheme to complement the legislative and regulatory framework.

More information

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