NRAS - is it worth it?

As I keep saying, where are all the post purchase success stories coming from actual buyers? They are few and far between.

For this to be brilliant we need to read a host of raving investors that have bought a NRAS, backed by actual figures outlining why its has been brilliant.

Might need a few more years for such stories to come out.

These forums (like most forums) tend to attract the negative, rather than the positive. That's just the nature of blogs. However, if you read through all the NRAS blogs, there are several positive stories.

That being said, there are two issues being complained about in the forum;
1. valuations
2. build quality

Valuations - so far, of the 4600 NRAS properties actually delivered, most have been in SE Qld, most have been construction, and most are getting hit pretty hard by valuers. So it seems to some forum members to be a problem related to the NRAS itself, but that isn't a very fair assessment. The issue of valuations is affecting ALL property in SEQld at the moment, whether it is eligible for NRAS or not, and this has been the case for the last 8 or 9 months at least. There are two reasons for it; marketing fees and oversupply. Regarding fees, property marketers are typically paid 30-40K to sell a property. That represents an 8-10% commission on a typical 400K property. Valuers know this. Regarding oversupply - SE Qld is oversupplied. The Gold Coast corridor and inland towards Ipswich has nearly 18 months excess supply according to agents there. In particular, some parts of the GC have fallen 40% in the last 6-12 months. If you take both these factors into account you can see why there are valuation problems.

In a nutshell, because marketers are focused almost singularly on selling SE Qld NRAS stock, an area that is already oversupplied, because that's where the big commissions are, you're hearing bad valuation news a lot. Valuers arent silly. They know how the property marketing industry works, and they will value with a view to protecting their backsides. This hasnt been a big issue in the past because the area wasn't oversupplied. Valuations would often come in 10-15K under contract price in the past, to cater for the marketers fees. but not 30, 40, 50K under like they are now.

The other issue raised here is build quality. All new construction carries risk. To be fair, anyone can get dudded by any project builder or developer anywhere in the country - but it really has nothing to do with the property being eligible for the NRAS or not. It's not a new phenomenon that popped up when NRAS came into the market. It's up to buyers to check whats being built. I'm not sure we can reasonably expect the Govt to put building inspectors on the ground to check all progress on all NRAS construction, nationwide. Other than that, the broader responsibility for checking that the progress on builds matches the specs in a fixed price building contract, is meant to lie with valuers. Most lenders require a valuer to sign off on a progress check before paying the slab, frame, roof, lockup, completion stages on a construction loan. Whether the valuers even bother to go and check the work is something you'd have to ask the valuers or the lenders...

So like all things, perspective and balance is important. Only a handful of complaints exist on this forum. Some of the commentary assumes there are dozens and dozens of complaints posted here, but there are not. And there are several good news posts.

The best advice is to understand why bad valuations happen, and to probably take a look at the North Queensland stock or interstate in Vic, SA, NSW , WA etc- where you'll find far fewer issues around valuations. If your marketer doesnt offer properties there- go to one that does. There are marketers willing to accept smaller commissions in other states, who have good stock available. It's your money after all, and your investment.

If you can buy NRAS that is built as it is meant to be, and values well - that should result in a very happy experience. I dont think its fair to attack the scheme because of builders behaving badly or marketers pushing buyers into areas of oversupply because they are chasing maximum commission.
Some interesting information about Brisbane.

An average of 2.5% decline in valuations across the board in the last quarter. Coupled with a further 15-20K being stripped out of the valuation on new investment properties being sold through marketers, these official figures from the ABS confirm what has been discussed here, about SEQld property being valued low over recent months. ie- low valuation issues are not peculiar to just NRAS properties. The whole market there is being valued downwards at the moment.

Expect valuers to continue to be very conservative with valuations in a market where the data shows falling prices.

As I've said previously, look at N Qld or other states for NRAS properties for the time being, until the Brisbane corridor starts to improve (could be 18-24 months at least, given oversupply issues there) Valuations in those areas are faring much better. If you are set on SEQld however, expect that valuation shortfalls of 30-40K will be a given on most 400Kish properties there.
Good to hear
I am looking at investing 170k down and borrow 200k on a property in Caboulture should pay for itself I also hear the property manager is key. Mine will be Horizan Housing. Love to hear negative or positive feedback. Or other places to buy house only in the 360k range nras.
NRAS has been very good to me. When the GFC hit I decided to get rid of a few –CF properties and replace them with a smaller number of neutral or positive ones. I stumbled on an NRAS property and since then have bought a few more.

My experience has been mostly positive.

- close to neutral or slightly positive CF, owed to grant. When grant ends after 10 years, the property will be +CF on its own feet anyway.
- discounted rent gives you literally unfair advantage over other properties
- very quick to rent. Tenants try hard to keep their tenancy
- automatic rent increases, no negotiation needed
- new properties: almost nil maintenance, large depreciation

- most NRASs are located in large developments on the edge of urban areas (so you should try to find one in a smaller niche development – even large developers have these from time to time)
- erratic bank valuations due to few comparables
- off the plan (make sure your finance is water tight)
- more limited financing (however this is getting easier by the day)
- NRAS management fees

Where there’s no difference with normal properties:
- same price as other properties in the same development
- same CG potential as any other local property
- check that you have full title
- own choice of tenants
- not social housing (tenants are middle class), number of NRAS’s capped per development
- able to sell at any time, incuding to non-investors.

I’m quite pleased with my oldest NRAS which is now in its third year (still too early to make a judgment on the other 3).
- it’s been really smooth sailing
- original cost $315K, revalued at $375K two years later when refinanced, now worth probably $365K. ROI 22% per year.
- feeling really secure and if I had no other properties than these I'd be watching the current economic turmoil with absolute detachment :)! Basically I’ve got 10 years to ride out any capital loss and hopefully catch a cycle or two.
Due Diligence: Be Well Informed Before You Buy, There Are Multiple Management Models


Mike and I attended a workshop in Melbourne this week.

We are very interested in this scheme as we have a number of (family) properties leased to Office of Housing in Victoria and these arrangements have gone well over a number of years

However, NRAS is not Social Housing and all of the properties are new. Some are ‘Off The Plan’ but others are finished before being offered for sale.

There seems to be real differences in how the Consortiums manage the project, and whether the investors then get 75% or 80% of ‘market rent’.

There is lots of information on the and the as well as eg information for tenants on

I applaud this initiative and am now in earnest discussion with Daughter and No: 2 Son and would hope that they do follow through with this and maybe buy a townhouse each. They already have properties currently leased to Office of Housing and are no strangers to the ‘set and forget’ type of property investment.

I have always considered property to be an ‘Ethical Investment’ as it benefits everybody.

This NRAS scheme would seem to be a Win-Win for all concerned. Discounted rent for working tenants, with a tax free bonus of not less than $95,240 paid directly to the landlord over the ten years, and who also gets a brand new investment property with all the usual depreciation and tax benefits, plus the likelihood of a vacancy-proofed investment under the watchful eyes of a double layer of professional management companies!

And, as the presenters explained, depending on the structure of the entity and the management policy of the consortium managing your project, you may have the opportunity of withdrawing from the scheme at any time and dealing with the property in the usual way eg move in yourself, rent on the open market, or sell without restriction.

The operative condition here is the lease and while, in theory, any of the selling agents could market any of the projects, different selling / estate agencies tend to deal with different consortiums. Some prefer to deal with the ‘Not For Profit’ or Charity consortiums, whereas other agencies prefer to deal with the commercial consortiums

I guess if you were a superannuation fund or an institutional investor you would perhaps want a ten year Head Lease which runs with the title, but an individual investor may prefer a Non Entity Joint Venture (NEJV) Structure so that they have some latent control over the investment.

I was speaking with my ANZ Relationship Manager last week, and he was very surprised that we have had the Bank for 14 years now – according to him, this is most unusual and that in his experience investors tend to have properties for up to about 7 years and rarely longer than that.

So if you are interested in the NRAS scheme, as a Mum & Dad Investor make sure you understand the opportunity and threat with the different styles of consortium and different types of lease available. Ten years goes past in the blink of an eye, but life is what happens to us when we’ve made other plans

Attend at least two workshops and ask many questions. This may be the greatest thing since sliced bread, but just make sure that you don’t have a hidden wheat allergy!

Last edited:
Builders inspection?

I sympathise with your experience. Although many say not to do it, from your experience I've learnt that even newly built properties require a building inspection, which should pick up any of these issues. $400 well spent.

I have sought and paid for legal advice and have sought advice from QCAT.

The advice so far has cost 9k and interest for two months of 8k. with no reasonable outcome in my view with the lawyers.

The QCAT advice is 50K+ and...... you had better get the best lawyers or the builder will eat you alive.

They knew when I said duplex, QCAT gave me the name of the builder.

They were also able to advise their strategy..... this appears to be standard practice for this builder in my view.

In the Laidley Valley development, a friend of mine's investment property had to have the roof taken off and the fire wall corrected, as the council would not accept the certifiers sign off on it after they inspected it.

Yes... same builder.

All I can say is that I have a letter from the Hon Tony Burke MP and he is sympathetic but you are on your own.

It is a government initiative that is not government supported is my experience.

Be ready to defend your NRAS investment or accept what ever you have been given.

The contract was not worth the paper it was written on in my view.

I did not get what I paid for.

I am not happy with the NRAS or the governments pathetic response.

They don't explain that you are on your own with a well funded builder that has strategies ready to take you on.

They know exectly what they can get away with in my view.

Not only is the price over inflated but they take 30-50k of value out of your contract.

It will take the next ten years to break even in my view.

You wont find this information in the governments investment brochure though... so be aware.

Be very aware!

As the builder explained to me.... it's only an investment property, you have a roof and a fire wall so get over it.

There is one NRAS lender - firstmac- who have valuation inspections done at each stage of the build, so that this sort of thing doesnt happen. They require a signed valuation report verifying that the work has been completed to the standards outlined within the building contract, and if the valuer finds that any of the work hasn't been completed to the standard of the building contract, they withhold payment to the builder until the work is completed.
Most other lenders dont do progress inspections, so this process adds 5 x extra valuation fees of $110 to your overall loan costs, so some people see it as a negative, unnecessary additional expense when compared to other lenders costs, but I think you can see it's probably money well spent on construction loans, to be sure you get what you pay for.
so some people see it as a negative, unnecessary additional expense when compared to other lenders costs, but I think you can see it's probably money well spent on construction loans, to be sure you get what you pay for.
such costs are usually considered as a waste by many borrowers..........until the tears