The Commonwealth Government has announced that it will
not proceed with Round 5 incentive allocations under the National
Rental Affordability Scheme (NRAS).
Below we review the announcement and subsequent publications by
the Department of Social Services (Department)
regarding this Budget measure.
BACKGROUND TO NRAS
NRAS commenced in 2008. The scheme aims to promote the
development of affordable housing by the provision of a refundable
tax offset or cash payment for providers of housing leased at a
rate of 20 per cent or more below market value rent. The scheme was
also designed to allow for collective investment in relevant
dwellings by the provision of tax offsets to investors in an
investment consortium or trust.
NRAS incentives were offered to participants in a series of
rounds following calls for applications. Applications for Round 5
incentives opened on 18 April 2013 and closed on 22 May 2013. No
incentives have been offered in respect of Round 5 to date.
Budget papers released on 13 May 2014 state that the Government
will not proceed with Round 5. The Government asserts that this
measure will achieve savings of $235.2 million to be redirected to
other policy priorities.
Funding for incentives from earlier rounds that are uncontracted
or not used within agreed timeframes will be returned to the Budget
however funding for tenanted NRAS properties will be
In commenting upon the announcement, the Department has stated
that the scheme was slow in delivering affordable homes and has
failed to achieve delivery targets despite ongoing funding.
CONSEQUENCES OF ANNOUNCEMENT
The Department has released further information regarding the
expected outcome of this measure, summarised as follows.
In relation to Round 5, the previous assessment process was not
finished and no further work will be undertaken. No incentives will
be allocated for Round 5 and there are no funds allocated for
Incentives already allocated will continue to be funded for up
to ten years subject to satisfaction of agreed timeframes.
In the past, dwellings have been delivered after agreed dates
and the Department will be withdrawing incentives where
insufficient progress is made. In this regard, the Government will
be imposing tighter conditions on the delivery of dwellings and
participants will be notified of any changes to conditions.
Investors in completed NRAS dwellings that are currently rented
as part of the scheme should be unaffected by the
Corrs is currently at the forefront of affordable housing issues
and has extensive experience in acting for both not for profit
organisations and the private sector. If you have any queries or
would like further information in relation to the impact of the
Government's announcement, please contact us.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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