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“It (NRAS) represents a new investment opportunity in the Australian market. More than 1.5 million households will be eligible for tenancies under the Scheme - a large and diverse pool of potential tenants for investors in affordable housing.” The Hon. Wayne Swan (Treasurer)

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Improved property yields by using NRAS Copyright Queensland Property Investment Š 2009


NRAS The National Rental Affordability Scheme Using the QAHC Model

A Summary

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BEFORE WE START...

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WHAT’S IN IT FOR US?

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NRAS The rental market The Commonwealth Government has identified 1.5 million households that are eligible for the National Rental Affordability Scheme (NRAS)

The supply shortfall is running at around 30,000 - 40,000 dwellings a year

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WHY QAHC ? The only guaranteed supplier of a TAX FREE incentive by agreement with the ATO The only not-for-profit organisation working under the NRAS banner (versus fund management structures) Provides a fully comprehensive property management model

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NRAS What’s in it for you? A tax free incentive of $8,672 per dwelling each year for 10 years An incentive paid to owners as a tax certificate at the end of each tax year In exchange for the tax free incentives new houses are rented at a discount of 25% to market rent to eligible tenants - resulting in higher occupancy rates and longer leases

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The QAHC has arranged Property Management Agreements that include ‘all in’ costs. There are no extra charges for things such as Annual Rental Increments Letting Fees Re-letting Fees Advertising Administration etc. Copyright Queensland Property Investment © 2009


RENTAL SECURITY

• The Property Manager must pay rent for the first two weeks of any vacancy that occurs after a NORMALLY occurring end of lease situation.

Abnormal vacancies are covered for up to 15 weeks under the extended insurance Policy put in place by the QAHC – another significant benefit they offer. Copyright Queensland Property Investment © 2009


NRAS What happens if I want to sell the property? The property can be sold to another investor with the balance of the 10 year lease in place The property can be sold to an owner/occupier, however the NRAS certificate would be lost The NRAS certificate can be transferred to another property that fits the criteria in the immediate vicinity.

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NRAS Offering peace of mind to owners Long term tenancy agreements provide tenant & landlord security Responsibilities of tenants improved through fear of losing NRAS discounted rent ($5000 reasons to pay rent on time and look after the place) There is NO variation of discernible quality of housing within estate NRAS housing is randomly distributed through estates generally at a maximum take up of 30% Copyright Queensland Property Investment Š 2009


NRAS The important numbers NRAS Incentive is indexed annually to the national rental component of CPI. Currently the rental index is running at between 6 & 12% per annum (8.4% on 08/09) Rent incentive is indexed annually to the state rental component of CPI. Currently the rental index is running at between 6 & 12% per annum (10.2% on 08/09) Market rents are subject to independent assessment in years 1,4 & 7 Suitable stock can range from studio apartments at $200 pw to family housing at $400 pw Copyright Queensland Property Investment Š 2009


NRAS Income thresholds for eligible tenants Parent/s with 3 children earning Parent/s with 2 children earning Parent/s with 1 child earning Singles with no children

$98k - $123k* $85k - $106k* $71 - $89k* $41k - 52k*

Income thresholds are indexed and can be exceeded by 25% for up to 2 years and still remain within NRAS tenancy eligibility criteria. • Normal tenancy pre-checks are required & income levels do not guarantee eligibility. • Groups particularly targeted are community ‘essential’ persons such as policemen, firemen, teachers & nurses Copyright Queensland Property Investment © 2009


NRAS A typical NRAS enhanced property investment yield 4 bed house & land Market rent per week NRAS discount 25% Reduced rent per week

$400,000 $400

$20,800

-$100

- $5,200

$300

$15,600

Tax free annual subsidy Gross cash per annum*

$8,672 $24,272

* (before allowing for normal operating expenses) Copyright Queensland Property Investment Š 2009


NRAS A typical NRAS enhanced property investment yield 2 bed unit

$300,000

Market rent per week

$300

$15,600

NRAS discount 25%

-$75

- $3,900

Reduced rent per week

$225

Tax free annual subsidy Gross cash per annum*

$11,700 $8,672 $20,372

* (before allowing for normal operating expenses) Copyright Queensland Property Investment Š 2009


What’s the value of an NRAS certificate?


A typical NRAS enhanced property investment yield now looks like this... 4 bed house & land

$400,000

Market rent per week NRAS discount 25%

$400

$20,800

-$100

- $5,200

$300

$15,600

Reduced rent per week Tax free annual subsidy

$8,672

At top rate of tax (46%) worth

$16,059

Effectively producing

$31,659 Copyright Queensland Property Investment Š 2009


NRAS Benefit to the investor A 10 year head lease to the owner Significant yield improvements A secure income stream protected by a mix of insurance policies, self insurance & management policies Indexed rent growth (not property manager myopia) Full property management services Increased sale-ability of the NRAS enhanced property Copyright Queensland Property Investment Š 2009


NRAS Stock Availability

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NRAS endorsed Available now Chinchilla Cairns

(SOLD) (Developer model)

Proserpine

Med $329k

Rent $420pw

Gladstone

Med $425k

Rent $425pw

Kingaroy

(SOLD)

Caboolture

Med $410k

Rent $410pw

Ipswich

Med $405k

Rent $405pw Copyright Queensland Property Investment Š 2009


NRAS pending Property can be purchased now subject to NRAS approval with just a $1000 deposit

Morayfield

Med $399k

Hervey Bay

Med $415k Rent $350pw

Townsville H&L Med $410k Townsville MD

Rent $375pw

Rent $400pw

Med $350k Rent $370pw Copyright Queensland Property Investment Š 2009


Where to from here?

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Take the next step...

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For further details contact: David Hedley-Ward - 0406 011 123 or Russell Dell - 0400 409 000

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NRAS disclaimer

The information recorded in this document is provided on the basis that readers will be responsible for making their own assessment of the information and are advised to verify all relevant representations, statements and information. No liability (in contract, tort or otherwise) will be accepted for any loss or damage incurred as a result of reliance upon any material contained in this publication, or for any information or advice provided in this publication or incorporated into it. Remax Property Associates nor its representatives are permitted by law to offer you financial (including tax) advice nor make recommendations. Copyright Queensland Property Investment Š 2009

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