Hous­ing scheme wins over in­vestors

The Na­tional Rental Af­ford­abil­ity Scheme is not only pro­vid­ing hous­ing but also prov­ing at­trac­tive for mum and dad in­vestors, writes Prop­erty ed­i­tor Michelle Hele

The Courier-Mail - Property - - INFOCUS -

IT MAY have had a shaky start and a black­list dis­cour­ag­ing banks from lend­ing money for its prop­er­ties caused some angst late last year, but the Na­tional Rental Af­ford­abil­ity Scheme ( NRAS) ap­pears to have weath­ered the storms and found trac­tion for res­i­den­tial in­vest­ment.

Ac­cord­ing to the lat­est fig­ures, Ca­bool­ture has the high­est num­ber of NRAS in­cen­tives al­lo­cated so far, with 105 prop­er­ties.

In terms of re­served al­lo­ca­tions (when de­vel­op­ers have ap­plied for al­lo­ca­tions in the scheme but they have not yet been built) Cherm­side tops the list with 380 al­lo­ca­tions re­served as at Jan­uary.

Un­der the NRAS pro­gram, in­vestors get tax in­cen­tives for rent­ing out prop­er­ties at 20 per cent be­low mar­ket value.

El­i­gi­bil­ity to rent the prop­er­ties is based on in­come.

An­a­lyst Diana Howes of Res­o­lu­tion Re­search says while she was sure some NRAS prop­er­ties had been on­sold, there had not been enough trans­ac­tions to date to de­ter­mine whether the scheme added cap­i­tal value to the prop­er­ties.

But she be­lieves anec­do­tally, it would be an in-de­mand as­set as NRAS has been shown to pro­vide su­pe­rior guar­an­teed re­turns.

She says it is not a sim­ple fi­nan­cial model, but there has been strong ev­i­dence of up­take over the past six to seven months.

‘‘It is ba­si­cally cash flow pos­i­tive from day one and year one. It is prob­a­bly as bul­let proof as it gets,’’ she says.

Howes says the Gov­ern­ment has an agenda of pro­vid­ing af­ford­able hous­ing for peo­ple and this was a way to make it hap­pen.

She says it is not so­cial hous­ing, but a com­mer­cial earn­ing ve­hi­cle.

‘‘In Queens­land, we have es­ti­mated that there are 94,400 key work­ers who qual­ify for NRAS, 76,000 stu­dents and then, within greater Bris­bane, 170,500 peo­ple have an im­me­di­ate need for af­ford­able hous­ing op­tions,’’ she says.

‘‘It is a more cau­tious in­vestor who is look­ing for a long-term rental yield (who are at­tracted to NRAS).

She says she would like to see an ex­ten­sion of the scheme.

An­drew Scriven of Col­liers In­ter­na­tional says de­mand has been strong for NRAS prop­er­ties which they have been in­volved with.

Col­liers In­ter­na­tional re­cently re­ceived five al­lo­ca­tions on a project and sold them within a week.

Scriven says while orig­i­nally it was thought the prop­er­ties would ap­peal to su­per­an­nu­a­tion funds and big in­vestors, it had proven to be more en­tic­ing for ‘‘ mum and dad’’ in­di­vid­ual in­vestors.

He says the buy-in price was gen­er­ally in the af­ford­able price range be­cause for NRAS prop­er­ties to work in terms of tax breaks, they needed to cost pur­chasers be­tween $300,000 and $450,000.

He reck­ons once it gets to about $500,000 it is not as en­tic­ing.

‘‘It is a fixed amount you get as a tax credit. A higher pur­chase price re­ally doesn’t work,’’ he says.

Re­ports so far from some in­vestors is that they are see­ing re­turns of po­ten­tially up to 7 per cent.

Ac­cord­ing to Col­liers In­ter­na­tional, rental yields in Bris­bane are high for apart­ments. Bris­bane yields are cur­rently about 5.6 per cent – the high­est of cap­i­tal city mar­kets.

It also found af­ford­abil­ity was at its high­est lev­els since the De­cem­ber 2009 quar­ter, with Bris­bane be­com­ing more af­ford­able than Ade­laide.

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