National Rental Affordability Scheme

Explanatory Guide

Version 3.0
DSS January 2018

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Explanatory Guide

National Rental Affordability Scheme

Table of Contents

About this guide

Glossary

Allocation of dwellings into the Scheme

Offers of allocations

Reservations of allocation

Allocating reserved offers of allocation

Applications to vary certain conditions of a reservation of an allocation (change requests)

Eligibility to receive an incentive

Conditions of allocations

Statements of Compliance

Eligible tenants

Market value rent and rent charged

Market value rent

How do substitutions and market rent valuations interact?

How do provisional allocations and market rent valuations interact?

Rent charged

Provisional allocations

Vacancies

Receiving an incentive

Conclusion of the 10 year incentive period

Administrative Action

Withdrawing a reservation of allocation

Transfer of allocation to another rental dwelling

How do substitutions and market rent valuations interact?

Transfer of allocation to another approved participant at the request of an approved participant

Transfer of allocation to another approved participant at the request of the investor or at the Secretary’s own initiative

Revoking the allocation (other than provisional allocation)

Revoking a provisional allocation

Approved Participants obligations

Approved participants obligations to investors

Obligation to pass on incentives in a timely manner

Incentives not to be withheld or refused if investor fails or refuses to accept other services provided by the approved participant

Incentives not be withheld or refused if bond not paid

Reconsideration and Internal Review of NRAS decisions

A decision not to make an offer of allocation or a decision not to make an offer of allocation that relates to a particular dwelling

A determination of reductions made from an incentive amount

Review by Administrative Appeals Tribunal (AAT) of decisions by Secretary

About this guide

This guide provides details of the implementation and administration of the National Rental Affordability Scheme (“NRAS” or the “Scheme”) to complement the legislative and regulatory framework.

The NRAS is established by the National Rental Affordability Scheme Act 2008 (“theAct”)and the National Rental Affordability Scheme Regulations 2008(“theRegulations”).

If there is any inconsistency between the Explanatory Guideand the above mentioned legislation, the legislation prevails to the extent of the inconsistency.

The Explanatory Guide outlines:

the allocation process;
eligibility to receive an incentive; and
administrative action by the Department.

The Department reserves the right to amend the Explanatory Guide at its discretion and will provide reasonable notice of amendments once made.

A copy of the Act and the Regulations can be found at

Glossary

AFAR / “Actual first available for rent date”, the term used in FOFMS portal.
ARAD / “Agreed rental availability date”.The term “current estimate of first available for rent” is the term used in FOFMS portal and is synonymous with the agreed rental availability date.
Approved participant / This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.
Approved rental dwelling / This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.
Conditions of allocation / The conditions approved participants are to comply with in order to be eligible to receive an incentive under the Scheme.
Department / TheDepartment of Social Services.
Endorsed charitable institution / An entity that is endorsed as exempt from income tax by the Commissioner of Taxation under section 50105 of the Income Tax Assessment Act 1997.
Incentive / An incentive that is paid or issued as a tax offset under the National Rental Affordability Scheme Regulations 2008.
NRAS or the Scheme / National Rental Affordability Scheme.
NRAS year / Short for National Rental Affordability Scheme year, and means (1) the period beginning on 1July 2008 and ending on 30 April 2009 for the first year of the Scheme; (2) the period beginning on 1 May and ending on 30 April for subsequent years.
NRAS incentive index / This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.
NRAS market index / This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.
Provisional allocations / Where the agreed rental availability date has passed and the reservation of allocation has not been allocated into the Scheme, the reservation of allocation will be provisionally allocated. Provisional allocations start the 10 year incentive period on the agreed rental availability date but will not be eligible to receive an incentive until the provisional allocation has been allocated into the Scheme.
The Act / National Rental Affordability Scheme Act 2008.
The Regulations / National Rental Affordability Scheme Regulations 2008.

Please refer to Section 4 of the Act and Regulation 4 for the meaning of all defined terms.

Allocation of dwellings into the Scheme

Offers of allocations

NRAS Rounds One to Five plus the Shovel Ready round have been announced, assessed, and are now closed.No offers were made under Round Five, as announced in the 2014-15 Federal Budget.There are no open funding rounds for the Scheme.

An applicant is a person or entity that made an application during one of the offer of allocation rounds. If the applicant was successful during the application process, the applicant received an offer of allocation.When an applicant accepts an offer of allocation they become known as anapproved participant in the Scheme.

Reservations ofallocation

In situations where the dwelling is not yet available for rent at the date of the offer, the offer of allocationis reserved.The Secretary may withdraw a reservation of allocation if any of the following events occur:

a)the dwelling is not available for rent by the agreed rental availability date;

b)the Secretary is satisfied that the dwelling will not be available for rent by the agreed rental availability date;

c)the applicant fails to comply with any conditions of the reserved allocation;

d)any advertisement relating to the reservation of allocation:

is likely to mislead; or
misrepresents the Scheme; or
exaggerates or overstates the tax or other financial advantages resulting from involvement in the Scheme; or
presents the government as underwriting or endorsing the applicant, the dwelling or a proposed investment; or
presents the government as dealing directly with investors; or
presents the government as being in partnership with any applicant, person or entity publishing details in association with the Scheme;

e)the application for the allocation:

includes information that is false or misleading; or
fails to include information that the applicant knew, or ought reasonably to have known, was relevant;

f)an application made under Division 2 in relation to the reservation of the allocation:

includes information that is false or misleading; or
fails to include information that the applicant knew, or ought reasonably to have known, was relevant.

Allocating reserved offers of allocation

Reserved offers of allocations will be allocated into the Scheme on the earlier of the date when the conditions of the reservation of allocation are satisfied or the agreed rental availability date for the dwelling.Reservations of allocation cannot have an agreed rental availability date after 30 June 2016.For reservations of allocations offered under the Shovel Ready Round, these reservations of allocation cannot have an agreed rental availability date after 31 July 2015.

When applicants are seeking to become approved participants by obtaining an allocation they need to ensure the conditions of the reservation of allocation are satisfied.In order to do this, applicants are required to provide evidence and confirmation of the following information:

The date a dwelling is first made available for rent including providing an electronic copy of the certificate of occupancy or equivalent document demonstrating that the dwelling is fit for tenant occupancy as of the first available for rent date.The certificate of occupancy is to be uploaded to the NRAS Portal.
A written market rent valuation (MRV) that specifies a date, within the permitted valuation period (i.e. 13 weeks either side of the first available for rent date) to which the market value rent relates; and is lodged (i.e. uploaded to the NRAS Portal) within 13 weeks of the first available for rent date.
The MRV must include the market value rent.The market value rent must exclude any additional services such as meals, Foxtel, internet service etc.
The address on the MRV must match the address on the NRAS Portal and on the certificate of occupancy.
The dwelling size on the MRV must match the dwelling size on the NRAS Portal.
The dwelling style on the MRV must match the dwelling style on the NRAS Portal.
The MRV must be completed by a registered valuer in the state where the dwelling is located.
The MRV must provide a market value rent amount exclusive of Goods and Services Tax (GST).
The dwelling must meet any special conditions agreed to in the letter of offer, for example, any specified energy efficiency ratings or accessibility levels.
The MRV must adhere to the checklist provided to all approved participants and available on the DSS website.

The Secretary must notify the applicant when a reservation of allocation is allocated or withdrawn.

Applications to vary certain conditions of a reservationof an allocation (change requests)

Approved participants can apply to vary the conditions of a reservation of an allocation relating to the following:

location:a location may only be varied if, as a result of a natural disaster, the dwelling cannot be built in the approved location.
size:the size of a dwelling may only be varied if a dwelling is provisionally allocated and the dwelling is delivered with a different number of bedrooms than those agreed in the conditions of a reservation.The approved participant will be required to provide relevant evidence to support their request to change the number of bedrooms.

special conditions: an approved participant may apply to vary the special conditions of a dwelling under certain circumstances.

Eligibility to receivean incentive

Conditions of allocations

The Regulations were made in 2008 and have always provided that approved participants in the Scheme can only receive an incentive where they meet all conditions of allocation in an NRAS year (defined as a period beginning on 1 May of each year).Regulation 25 (subject to any proportionate reduction available under regulation 28) essentially requires all conditions of allocation to be met, not just some.Once allocated into the Scheme, the 10 year incentive period starts on the actual first available for rent date in relation to reserved allocations and the 10 year incentive period starts on the agreed rental availability date for provisional allocations.

Where there has been an allocation for an incentive period in respect of an approved rental dwelling, there are mandatory conditions that must be met before an incentive can be issued.These conditions are outlined in Regulation 16.They include:

that either (i) the approved rental dwelling has not been lived in as a residence at any time before the first day of the incentive period; or (ii) the approved rental dwelling was unfit for anyone to live in, and since the day on which it has been made fit for living in, it has not been lived in as a residence between that day and the first day of the incentive period;
to the extent that the approved rental dwelling is rented during an NRAS year that falls within the incentive period, the approved rental dwelling is rented to a tenant or tenants of a kind prescribed by the Regulations;
the rent that is charged for the approved rental dwelling is, at all times during the year, at least 20%less than the market value rent for the approved rental dwelling;
the approved rental dwelling must not be vacant for longer than 26 weeks in an NRAS year or vacant longer than a continuous period of 26 weeks across two NRAS years;
the approved participant must lodge Statements of Compliance for the approved rental dwelling with the Department in accordance with Regulation17;
each approved rental dwelling complies with the landlord, tenancy, building and health and safety laws of the state or territory and local government area in which the dwelling is located;
the approved participant must not, in relation to an allocation, provide information to the Secretary or the Department that is false or misleading, or fail to provide information to the Secretary or the Department that it knows, or ought reasonably to know, is relevant;
the approved participant complies with all special conditions;

the approved participant must obtain an MRV for each approved rental dwelling and the MRVs must:
relate to the market value rent for the dwelling on a date within the permitted valuation period, and
specify the date to which the market value rent relates;
the approved participant must lodge MRVs for the first, fifth and eighth years of the incentive periodwhich will apply as of the first day of the incentive period, and as of the first day of the fifth and eighth years of the incentive period, within the permitted valuation period; and

the permitted valuation period for the MRV begins 13 weeks before and ends 13 weeks after the day when the dwelling is first available for rent, or for the fifth and eighth years of the incentive period,13 weeks either side of the anniversary of the first available for rent date.

Statements of Compliance

The approved participant must lodge an annual Statement of Compliance with the Department for the approved rental dwelling in relation to each NRAS year during the incentive period for which they wish to receive an incentive.The Statement of Compliance must be lodged by 30 June after the end of the NRAS year, or a later date if approved by the Secretary (note: no extension will be granted beyond 30 September).Statements of Compliance must be in a form approved by the Secretary and it must include:

a) a statement confirming that at all times during the year, any tenant or tenants of the dwelling were eligible tenants, or details of any way in which this requirement was not met; and

b) details of the rental charged over the year; and

c) a statement confirming the rent charged during the year was at all times at least 20%less than the market value rent for the dwelling, or details of any way in which this requirement was not met; and

d) details of any period during which the dwelling was vacant; and

e) details of each investor for the rental dwelling; and

f) a statement that at all times during the year the approved participant, in respect of the dwelling, complied with the landlord, tenancy, building, and health and safety laws of the state or territory and local government area in which the dwelling is located, or details of any way in which this requirement was not met; and

fa) a statement that at all times during the year the approved participant complied with consumer protection laws in relation to the allocation, or details of any way in which such laws were not complied with; and

g) a statement confirming that all special conditions have been complied with or details of any way in which this requirement was not met; and

h) a statement that the approved participant has complied with itsobligationsin relation to incentives (i.e. regulations 30A, 30B, 30C and 30D), or details of any way in which these obligationswere not complied with; and

i) any other information as is required by the form.

Under subregulation 17(3) it is mandatory that the requirements in paragraphs (a) – (h) are included in the Statement of Compliance.These requirements have been designed so that a delegate who is assessing eligibility for an incentive is able to determine whether the conditions of allocation outlined in Regulation 16 have been met.

The Department assesses approved participants’ annual Statements of Compliance to determine whether approved participants are eligible to receive incentives at the end of each NRAS year.All conditions of allocation must also be met in order for an incentive to be issued.

Eligible tenants

Potential NRAS tenants are required to meet gross household income limits in order to be considered eligible tenants.The income limits vary according to the composition of the household.The income limits are indexed annually and the latest income limits can be found at

The assessment of household income occurs prior to the commencement of the tenancy and at the annual anniversary of the tenancy start date.The assessment is based on the household’s income for the previous 12 months.

In order for a household to become eligible tenants for NRAS purposes, their combined gross income must fall below the limit set for their household composition.

Tenants cease to be eligible tenants if they cease to be tenants of the NRAS dwelling or if their household income exceeds the income limit for their household by 25%or more in two consecutive tenant eligibility years.The existing tenant income limit is also listed at

All tenancy matters and lease agreements are overseen by legislation as determined bystate or territory governments.

The Australian Government does not select or manage NRAS tenancies.You can apply to rent an NRAS property through an NRAS approved participant or their tenancy manager in your state or territory.

For further information in relation to eligible tenants, aninformation sheet can be found at

Market value rentand rent charged

NRAS has two separate rent components: market value rent and rent charged.