Property Investor

Property is still regarded as one of the best investment tools because of its many benefits.As well as being the most favoured collateral by banks, investing in residential property can be useful for tax deductions involving negative gearing, and the property increases in value over time. Property is always in demand, and those who enter the industry intend to make money and they do it well through calculated risk management and analysis of trends.

There are plenty of wealth creation strategies that are associated with property investments, but none more sensible than the NRAS (National Rental Affordability Scheme) implemented by the Australian government in 2008. Over four years, the Australian government has pledged $1 billion to the Scheme to help encourage the construction of up to 50,000 houses and apartments for eligible individuals, families and couples.

The Commonwealth initiative works with State and Territory governments, property investors and not-for-profit housing suppliers to provide additional new houses for the rental market that will offer affordable rent for the Australian average wage earner. Additionally, this scheme generates higher-than-usual returns for property investors, encouraging stakeholders to develop additional houses to help the shortage of affordable rental housing.

The NRAS solely provides Australian low and moderate income earners with private rental properties, attempting to substitute housing commissions or social housing. The cash flow benefits and security of an NRAS property is a great incentive for any investor looking to capitalise on property.

Financial Incentives for NRAS Property Investors

2011 saw the beginning and steady rise of NRAS properties coming onto the Australian market and by 2014, the Australian government aims to encourage institutional and private investors, developers and not-for-profit groups to deliver up to 50,000 more affordable residential rental dwellings. Investors wishing to take advantage of this Scheme need to apply for NRAS Incentives and agree to rent at least 20% below market rates.

Investing in an NRAS property is a great step towards building a property portfolio. The NRAS offers tax free financial incentives to property investors who build and then rent these properties to low and moderate income households at 20% below the market rates. The Scheme provides generous financial incentives of a minimum of $9524 per lodging to property investors from the Australian Government and State or Territory contribution. This helps the community by seeking to address the shortage of affordable rental housing, and at the same time, provides benefits for the property investor. There has never been a better time to buy investment property Melbourne wide.

Property investors can take advantage of all the normal negative gearing benefits as well as receiving a tax free incentive from the Australian government and State and Territory governments for the next 10 years, meaning any property investor will receive more than $90,000 of tax free incentives spread over a decade. Not only is an NRAS property a great long-term investment, but property investors will be helping many people in their community to have affordable housing.

Eligibility: Property Investors and Tenants

To be eligible to be a property investor under NRAS, there are a few guidelines in which to adhere. First, the house must not have been lived in previously. It may be bought and built brand new or can be converted from a non-residential dwelling such as a motel, hotel, storefront or warehouse, to a residential address.

In the instance where it has already been built and made fit for occupancy but has not had any dwellings yet, the property is also NRAS-approved. What does not constitute a rental dwelling under the NRAS is moveable accommodation such as house boats or caravans, allocated rooms within a single dwelling, emergency crisis accommodation or any dwelling that does not comply with the landlord, tenancy, building, health and safety laws of the State or Territory and local government.

The income levels for eligible tenants are specified in the NRAS regulations NRAS Victoria locals is determined by the applicant’s income, and the most eligible tenants are working members of emergency and community services such as teachers, nurses, police and ambulance officers. Retirees, aged tenants and students are also eligible.

The rules for an NRAS property, NRAS landlords and NRAS tenants are the same as standard State and Territory residential tenancy and eviction laws. Furthermore, investors no longer wanting to participate in NRAS Victoria or any other state or territory, can withdraw from the scheme at any time. This can be achieved by renting the property at full market rent or exiting the tenant and moving in as owner occupier.The investor is also responsible for ensuring that tenants meet the income criteria and that they are reviewed against the criteria every two years to ensure objectivity and fairness.

Where to Buy Investment Property

The NRAS Scheme has strict rules when it comes to where to buy investment property. Building an NRAS property must be close to transport, schools, shops and other facilities so that they are desirable for tenants. The properties must also contain private facilities such as bathroom and kitchen, a bedroom and living space and a separate lockable entrance.

Building a Property Portfolio with the NRAS

The NRAS will end for new investments on 30 June 2012, so property investors should look to buy before it is too late, however owners of NRAS properties will still continue to get the tax incentives for 10 years from purchasing their property. Buying an investment property in Melbourne under the NRAS of Victoria regarding residential property laws is a great wealth creation strategy that will reward property investors over the long run.

Property Investor and their contributing authors have made every effort to ensure that the information is free from error, neither Property Investor nor its contributing authors make any representation or warranty as to the completeness or accuracy. Readers must decide if this information is suitable for their personal situation or seek advice.