The Australia Property Rental Market
The Australian Federal Government established the National Housing Supply Council
in 2008 to undertake a study on the future of housing demand, supply and affordability
in Australia.
The Council released its State of Supply Report in February 2009 which highlights
the ongoing tend in upward pressure on the private rental sector, private renters
and the increasing difficulties of access to property and increased affordability
problems.
The Report identified several key issues in the housing industry, including:
- Projected demand exceeding supply;
- Increasingly housing costs affecting lower and middle income home buyers and tenants;
and
- Planning and development processes that constrain housing supply and affordability.
The Council report estimates that within 5 years by the end of 2013 that there will
be a shortfall in dwelling supply of 203,000 properties. This shortfall is expected
to continue until 2028 with an increase in the supply of new homes required to meet
future demand.
The Federal Government introduced the National Rental Affordability Scheme (NRAS)
in 2008 to encourage investment in bricks and mortar residential housing, through
a new class of tax effective property investment.
The National Rental Affordability Scheme Act 2008 was passed in November 2008. The
Act allows for certain Federal and State and Territory Government Incentives of
$8,000 per annum to be paid to the owner of an Approved NRAS Property.
The Questus Residential Investment Fund (QRIF)
QRIF was established as a means to allow investors who acquire an Approved NRAS
Property to receive the various Government Incentives provided for under NRAS.
The Government Incentives consist of up to $8,000 per annum indexed for 10 years
from the Federal Government ($6,000 per annum) and the State and Territory Government
($2,000 per annum).
By investing in an Approved NRAS Property and agreeing to the terms and conditions
contained in the Questus PDS you may receive the Government Incentives. Once you
have made your decision on which Approved NRAS Property you will acquire, complete
the application in the PDS to acquire an Interest in QRIF to access the Government
Incentives available through NRAS.
For an investor to be eligible for the Government Incentives, NRAS requires you
to rent your Approved NRAS Property to an Eligible Tenant at least 20% below the
Market Value Rent for a period of 10 years.
Security of Bricks & Mortar
When participating in the QRIF you have decided to buy an investment property. Your
Approved NRAS Property may be an investment apartment or townhouse not previously
resided in. QRIF has already made application to the Department of Families, Housing,
Community Services and Indigenous Affairs (FaHCSIA) to have approved NRAS properties
available for sale and participation in the QRIF.
Every investment carries with it an element of risk. A summary of these is contained
in section 7 of the Questus PDS.
Increase in Value on Property
The clue of many asset classes and investment may fluctuate over time. Investments
in direct property have generally showed consistent returns and have demonstrated
to be less volatile than other asset classes and investments such as listed equities.
As your underlying investment is direct real property, you will benefit in any capital
growth. Any increase in the value of property has taxation implications. You should
seek your own independent tax advice when you decide to dispose of the Approved
NRAS Property.
Other Taxation Benefits
All property investments offer certain tax related benefits such as depreciation.
As you own the Approved NRAS Property directly all the taxation benefits and deductions
are available to you. Other taxation benefits associated with owning property, such
as; property management, insurance and interest expense may also be deductable.
A significant taxation benefit of an Approved NRAS Property is that the Government
Incentives are available as either a refundable tax offset or non assessable income,
that is; ‘They are tax free’.
You should seek your own independent tax advice to find out what tax benefits are
available to you.
No Property Management Hassles
The Manager has secured property approvals from FaHCSIA to provide an alternative
in affordable rental housing. To maintain compliance with NRAS, it is necessary
for the Approved NRAS Properties to be managed by an approved property and tenancy
manager. There is no need for you to worry about rent collection or tenancy management.
Ownership Structure
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