The National Rental Affordability Scheme (NRAS) provides tax incentives for investors to develop affordable rental housing. It aims to increase the supply of rental properties for low to moderate income households by offering $8,000-$8,672 per dwelling annually for 10 years. The incentives are designed to encourage large-scale investment in rental housing and make rental properties more affordable through rent discounts of 20-25% for eligible tenants. The scheme targets delivering 50,000 new affordable rental dwellings over 4 years to address issues of rising rents, housing affordability, and stimulate the economy.

1. Treasurer Wayne Swan Explains NRAS Incentives for Property Investors
24th July 2008
Dear Potential Applicant,
Thank you for your interest in affordable housing and the Australian Government's National
Rental Affordability Scheme.
As you know, rent increases are outstripping wages growth and inflation. This is making it
harder for Australians on low to moderate incomes in the private rental market.
The National Rental Affordability Scheme is a major supply-side initiative to make rental prop-
erties more affordable by encouraging large-scale investment in rental housing for low and
moderate income families and individuals. It aims to assist institutional investors, developers
and not-for-profit groups to deliver 50,000 rental dwellings over the next four financial years
by creating a new residential property asset class for property investors.
The Scheme offers significant financial incentives to applicants commencing at a minimum
value of $8,000 per dwelling annually, for a period of 10 years.
The Incentives provided under the Scheme will assist investors to develop proposals that
provide an attractive rate of return. It presents a new investment opportunity in the Aus-
tralian 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
projects that will be made available through the Scheme.
This document has been developed to provide information to individuals, institutions and or-
ganisations that are considering investment in affordable rental housing.
We trust this information will assist to develop proposals to take up the incentives on offer.
Yours sincerely,

2. NEW!
NRAS
NATIONAL RENTAL AFFORDABILITY SCHEME
Tax Incentives for
50,000 New
Properties
$70k Per Property Tax Incentive
Available Now for Property Investors
New Government Property Investment Scheme
What is NRAS?
The Federal Government launched the National Rental Affordability Scheme in 2008 to address two
primary housing policy goals:
• Increase supply of new rental housing
• Improve affordability for middle income renters
NRAS will provide tax free incentives for 50,000 new affordable rental dwellings between 2009 and June
2012. THIS IS NOT A PUBLIC OR SOCIAL HOUSING PROGRAM. NRAS is an economic initiative,
part of the Federal Government’s Financial Stimulus Package, designed to stimulate the supply of
affordable rental property. The incentives are designed to encourage Australians to invest in rental
housing and at the same time build wealth through property capital growth. Successful applicants will
be eligible for significant financial incentives not available through traditional property investment.
Key Benefits for the Investor
 Government funded Tax Free Incentives totaling $100,000+ over 10 years (at least $70k more
than any traditional investment property)
 20-25% discount on normal market rentals for tenants = increased occupancy of properties
 NRAS incentive is income tax free. All existing tax benefits on investment property remain
Gain An Extra $70,000 Over 10 Years
12000
10000 NRAS
8000 Normal
6000
4000
2000
0
-2000 1 2 3 4 5 6 7 8 9 10
-4000
-6000
-8000
Source: QPEx Property Research
Comparison of Net Annual Cash Flows – 10 years. Accumulated Cash Flow Benefit = $70,643 (@
31.5% tax rate – also see “The Numbers” - page 4)
QPEx Property Research Pty Ltd ABN 90 083 486 060 All Rights Reserved 10 Dec 2009 Page 1 of 4

3. Property Selection Criteria
• All NRAS housing must be pre-approved under the Federal
Government sustainability criteria. Many houses and
complexes have been refused entry to the program as
quality compliance and locality criteria have not been met.
• NRAS properties must be located in urban or regional
growth areas with strong jobs growth and rental demand.
• Approved NRAS properties typically range in price from
less than $300,000 to $500,000, depending on location.
• There is no discrimination through quality of housing.
NRAS housing will be no different to new standard owner
occupier or investment houses, townhouses or units in the
better residential estates or complexes.
Quality Properties – Well Located
Our research focus is on investment properties which will deliver the best returns for our clients -
properties that are located, designed and built specifically for investors and typical investment tenancies.
While some NRAS properties are aimed towards social housing, the NRAS properties we select must
pass our strict selection criteria focusing on quality, design, location, value and rentability.
How it Works for Tenants
• Eligible tenants receive a discount of 20% to 25% off normal market rents.
• To be eligible, prospective tenant households must be within certain income thresholds. These
thresholds vary from just over $41,000 pa for a single adult person to almost $100,000 pa for 2
parents and 3 children.
• Tenants are subject to normal tenancy criteria
checks.
• The target market is typical middle income
families and professionals such as police,
teachers, nurses, public servants and
tradespersons.
• The emphasis is on long term rentals of 1 to 3
years in specified growth areas – where the jobs
are.
• Market rentals are subject to independent
valuation in years 1, 4 and 7. These are indexed
to the rental component of the CPI in other years.
How it Works for Investors
• As an NRAS Investor you will receive a generous annual tax free incentive for 10 years.
• The initial paid incentive was $8,000 in 2008 and was indexed by 8.4% to $8,672 for 2009. The
incentive is paid to investors at the end of each tax year in 2 parts:
A) $6,000 (indexed) as a tax rebate from the Federal Government in July
B) $2,000 (indexed) cash from the State Government in September
• An NRAS property can be sold at any time, with the remaining benefits passing on to the new
owners.
QPEx Property Research Pty Ltd ABN 90 083 486 060 All Rights Reserved 10 Dec 2009 Page 2 of 4

4. Benefits for Property Owners
A New Asset Class Long Term Certainty
The Australian Government will allocate Compliance with the Scheme will offer
50,000 incentives through the Scheme over investors certainty of contributions from the
four financial years. A further 50,000 Australian and State or Territory government
incentives will be allocated from July 2012 if in the form of the NRAS Incentive over a
demand from investors and tenants remains period of 10 years. The NRAS Incentive will
strong. These incentives aim to stimulate the be indexed to the rental component of the CPI
creation of a new ongoing asset class and a on 1 May each year.
development industry specialising in
affordable rental housing.
Higher Returns Reduced Tenancy Risk
Improved Cashflow - Properly managed NRAS
Compared to a Non- properties will always be in a
NRAS property, most position to attract superior
investors will improve tenants who will treat their
their net (after tax) cash NRAS tenancy status like gold.
flow by $4,000 to $5,000 Competition for NRAS rental
pa – with indexation properties is extremely high.
accumulating to Why wouldn't it be, with rentals
approximately $70,000 discounted substantially
over ten years. This is a compared to similar quality
huge benefit to properties?
investors, with the With a large pool of up to 1.5
incentives more than million eligible individuals and
covering the rental families, investors can expect a
discount. reduced vacancy risk. Even
Most NRAS properties after 4 years, the 50,000 NRAS
will be true “Positive properties will represent only
Cash Flow” properties – 2.5% of the total Australian
without any of the rental market.
compromises usually
involved (location, growth, tenancy issues,
etc). Ethical Investment
Income Tax-Free - The NRAS Incentive is Investing in affordable housing through the
income tax-free, indexed to the rental National Rental Affordability Scheme offers
component of the Consumer Price Index investment opportunities that may meet
(CPI) and is additional to existing taxation investors' own criteria for building ethical
arrangements including depreciation. investment portfolios.
QPEx Property Research Pty Ltd ABN 90 083 486 060 All Rights Reserved 10 Dec 2009 Page 3 of 4

5. The Numbers ...
Most NRAS investors will have positive cash
flows from year 1. The following example is
calculated assuming the average marginal tax
rate of 31.5%.
PROPERTY INVESTMENT EXAMPLE – YEAR 1 NORMAL NRAS
Typical 4 Bedroom House and Land Package $400,000 $400,000
Allowance for Purchase Costs $18,000 $20,000
Market Rent - Assessment per Week $370 $370
Less: Property Ownership Expenses $73 $73
Less: Management & Letting Expenses $41 $52
Less: NRAS Rental Discount (25%) N/a $93
Net Rental Income per Week $256 $152
per Annum $13,312 $7,904
Less: Interest at 6.0% per Annum $25,080 $25,200
Plus: Tax Refund (@ 31.5% marginal rate) PA $7,267 $9,046
Plus: Annual NRAS Incentives (Tax Free) N/a $8,672
Net Cashflow per Annum (-$4,501) $422
per Week (-$87) $8
Source: QPEx Property Research
Your Next Step... Discuss With Your Adviser!
Disclaimer: This information is produced for use by professional advisers only and is extremely simplified and general in nature. It
should not be used as the basis for investment or financial planning decisions, or as an indicator of past or future performance.
QPEx Property Research Pty Ltd ABN 90 083 486 060 All Rights Reserved 10 Dec 2009 Page 4 of 4