Ignoring NRAS spruikers of course IMO I always feel NRAS properties aren't prime tenants and owners retain a long term risk to the income stream (ie its houso housing). A buyer needs to understand THEY are assuming tenancy risks that non-NRAS housing also has (foolish to think it doesn't) but its a higher risk. Perhaps not substantially higher but has to be higher. The risks may not appear when renting - Just when selling - Or both.
The NRAS incentive is there to compensate that risk through encouraging private investors to invest in low income housing that the govt doesn't want to do...(Low income is the first problem) That speaks volume for the risk. That's my lender of last resort comment. Poor private investor may be burned now or in ten years. Is the offset etc enough ?
I wish NRAS came with the DHA refit benefit. The NRAS refit cost v's non-NRAS repairs hasn't had time to prove itself. Is the marginal NRAS benefit sufficient to cover a refit cost of $XXX in 10 years ?? Maybe me but I think of TV's houso's and cringe thinking of damage / wear costs. How do you cherry pick a good tenant ? You cant. Their rental history is protected. Yes they always paid their rent. $35 a week. How will they pay $220 ? Who will move in with them ? They often have job insecurity, habits and mental health issues too. That a owner cant ask about.
Selling an NRAS property has to be a harder sale for any REA v's a non-NRAS in same street. Or in cases where its a large % NRAS suburb the property val and liquidity has to be considered. It has to be harder to sell NRAS. Meaning seller may have to cut price when they want out (quickly or not ?)
Hope I don't come across as anti-welfare. Not intended. I think NRAS is a good. I just question if the benefits are conservative
Paul your position appears to be based on the premise that NRAS is social housing filled with social housing tenants. Let me clarify a few points you appear to have misunderstood.
1. All normal state and territory laws relating to tenancy management apply. This means tenants are selected, signed up, screened/reference checked, or even evicted from an NRAS approved property in precisely, exactly, specifically the same way as would occur with any non NRAS approved property.
2. Owners can select whomever they want as tenants, subject to one extra criteria - income eligibility. The income thresholds are quite generous, and increase 25% after qualifying, and annually thereafter, indexed to rental CPI . The ABS advises that 1.5 million Full Time PAYG earners qualify within the income thresholds.
3. DHA is a head lease arrangement with little or no control provided to the owner/investor. It is quite inflexible with little or no choice of tenant, offers weak cash flow, is available only in very limited locations and an investors "compensation" is a fresh paint job and carpets at the end of the lease. It isn't a bad investment, but it's certainly a super super conservative one. NRAS offers a far wider variety of locations, far more owner control, and over 130K of tax free cash flow (assuming 4% compounding increases) across 10 years . But it can also be on sold or withdrawn from the NRAS at any time. It is infinitely more flexible.
4. In addition to the income thresholds being indexed to rental CPI, rental increases and the actual tax credits themselves are also indexed in line with rental CPI. FYI, this means an average increase of 5.2% since 2008/9 when the NRAS commenced. That is @ double the rate of inflation.