Preparing for the end of NRAS
The NRAS commenced in 2008, providing an annual incentive to approved participants to provide affordable rental dwellings at least 20 percent below market rates. Dwellings began to exit the NRAS from August 2018 and incentive allocations will reach their conclusion through to June 2026.
Once an NRAS dwelling has expired, it will no longer attract a financial incentive; however, it will remain active until the final incentive has been processed and paid at the end of the NRAS year in which it expires.
Subject to meeting the usual NRAS compliance requirements, the final incentive payment will be a partial payment for the period from May 1 to the end date of the NRAS property incentive. The claim for the incentive payment will be processed as normal.
The Property Management Agreement with the allocated Property Manager will cease on the Incentive end date. Once the NRAS allocation has expired the owner:
- will no longer receive the annual NRAS refundable tax offset and incentive payment
- will no longer be required to charge discount to market rent or select NRAS eligible tenants
In preparation, we suggest that investors engage with their current NRAS Property Manager well in advance of the NRAS end date to discuss your options for the end of the incentive. This will ensure that the Property Manager has ample opportunity to:
- comply with residential tenancy regulations and provide the relevant notice periods for vacate;
- provide the investor with plenty of time to negotiate a new property management agreement with the current property manager or a new manager of their choice; or
- consider a sales strategy if they intend to market the property for sale.
Investors should work with their Property Manager to ensure their plans are actioned and, if they intend to charge market rent at the end of the NRAS, the Property Manager should ensure the final lease within the NRAS period aligns with the end of the NRAS Incentive. In accordance with NRAS Regulations, the Property Manager will notify your tenant/s of the end of the NRAS incentive period at least 90 days before the expiry date.
Investors should seek independent advice about how the end of the NRAS affects their investment strategy.