NRAS scheme still coming up short

by Caroline Dann18 Jul 2012

The government’s NRAS scheme has fallen short of its target to produce 50,000 affordable dwellings by June 2012.

Just 40,550 have been allocated since the scheme began, yet only 8,600 of these have been turned into low-rent housing, it was revealed yesterday.
The scheme offers a tax incentive to successful applicants, as well as rental returns, which is close to $10,000 in value.
David White, Australian First Mortgage’s joint managing director, told Australian Broker Online many investors were still concerned the scheme would not yield significant capital gains.
He said the slow take-up came down to three key factors.
“First, investors are concerned the value of these NRAS properties will not rise in the long-term. Second, they’re concerned opting out or selling after only a year or so is not an option. Finally, there are a few restrictions on building which could be a deterrent,” he said.
AFM has recently started accepting NRAS applications by brokers.  White believes the numbers will improve over the next year as “potential applicants see the benefits of others’ investments coming to fruition,” he said.
“The initial government target was a little ambitious. I think the 50,000 homes will be reached, once time goes on and more investors see the capital gains and appreciation.”
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