Many resident managers would recall the times when housing affordability was a real (and political) issue.  It is not a political issue anymore, but we are now starting to live with the legacies of what that political pressure produced.

One legacy was the creation of the National Rental Affordability Scheme (NRAS).  If you google ‘NRAS’ you will find a plethora of information online about what it means along with multiple ads for sales of NRAS properties.

In the very simplest of terms, if:

  • a new unit is NRAS approved; and
  • the owner of the unit rents it to eligible tenants (based on income brackets set by the Federal government) at a discount to the current market rental of at least 20%; then

that owner will receive generous tax rebates / offsets from both the Federal and State government at the end of every financial year.  These incentives are increased annually by reference to a generous index.

This has implications for management rights.

The perfect management rights letting pool has no common ownership of lots (other than perhaps two or so units) or common influence over lot owners (such as an investment club).  NRAS certainly changes that.

It is normally not the developers themselves that obtain the NRAS approvals. They are usually obtained by an NRAS ‘provider’. These providers are a mix of not-for -profit and for-profit organisations and they all run their NRAS programs as they choose – which means differences in every model.

Our experience has been that some of them are very good to work with.  Some aren’t.  There are various reasons for that, one of which is that the providers simply do not understand how NRAS and management rights need to co-exist.

Managed correctly (and that can be done), NRAS should not a problem in a management mights business, but you need to make sure that your lawyer understands how it applies to management rights.

An example of an article where we talk about these issues:

NRAS and Management Rights, what does it mean?

Future NRAS allocations a budget casualty

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