How to finance an NRAS approved property

The tax benefits of a National Rental Affordability Scheme (NRAS) approved property may be tempting for investors, but financing the property can be tricky. The NRAS is due to end in June 2026.

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Sarah Megginson

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Richard Whitten

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Key takeaways

  • National Rental Affordability Scheme (NRAS) properties are rented to tenants for 20% lower than market rent.
  • While there are tax benefits, the lower rent makes NRAS properties "riskier" to a lender, making it harder to get finance.
  • The scheme is set to end in June 2026, when all NRAS dwellings will exit the scheme.

What is an NRAS investment property?

The National Rental Affordability Scheme (NRAS) is a government initiative that is designed to increase the supply of new rental properties and to improve rental affordability across Australia.

It was launched in 2008 to help resolve the shortage of affordable rental housing in Australia. The scheme is ending in June 2026 as the incentive period ends.

How the NRAS works

  • Investors who purchase or build rental properties under the NRAS receive rental returns below normal market rents.
  • Typically, properties are rented out at 20% below the market value rent.
  • For example, if the market appraisal on a home is $600 per week, an NRAS landlord would offer the property to an eligible tenant for $480 a week.
  • In return, the landlord (or NRAS applicants) receives an annual tax incentive for 10 years on the eligible property (see tables below).

What kind of property can you purchase with NRAS?

The type of property you can purchase under the NRAS includes everything from studio apartments to family homes.

The main criteria are that the properties are new (not existing dwellings, unless it was registered as an NRAS property upon construction and is being resold) and located in areas where affordable rental accommodation is in demand.

Why is it harder to get finance for an NRAS investment property?

Many lenders don't accept an NRAS property as security for a home loan.

There is a long-term lease registered on the title, which means when the property is sold, the new owner must continue to rent the property through the NRAS in accordance with the terms on the lease.

Lenders assess property loan applications based on risk, and NRAS properties can be considered higher risk, as you can only sell them to other investors. Once a property is NRAS registered, you can't withdraw it from the NRAS pool and live in it or sell it to an owner occupier.

You are also accepting a lower than market rent for the property. This is offset by the NRAS incentive, but a lower rental income still makes lenders nervous, as most don't take tax breaks or offsets into account when they determine your ability to repay the loan.

How can you improve your chances of getting home loan approval for an NRAS property?

Generally, you will purchase an NRAS property through an approved consortium. These are currently:

  • Affordable Housing Consulting Pty Ltd (AHC)
  • Community Housing Canberra Ltd (CHC)
  • Quantum Housing Group (QHG)
  • Urban Affordable Housing Consortium (QAHC)

You may be able to borrow up to 80% LVR on the purchase price. However, the bigger your deposit, the less risky the deal is to the lender. So, putting down a higher deposit can improve your chances of being approved for a home loan.

Qualifying for a home loan for an NRAS-approved property will likely be easier with the help of a mortgage or finance broker, who can help you access finance to buy a property leased through the NRAS.

Will my lender know it’s an NRAS approved property?

Lenders can tell if a property you’re buying is part of the NRAS. They will see this from paperwork such as the title search, contract of sale or building contract.

Sources

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To make sure you get accurate and helpful information, this guide has been edited by Richard Whitten as part of our fact-checking process.
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Sarah is the author of How to Raise Rich Kids. With over 20 years of experience in property, finance and investment journalism, she is a trusted expert whose insights regularly appear across television, radio and print media, including Sunrise, Channel 7 News, Bloomberg and Yahoo! Finance. She has previously served as managing editor for Your Investment Property and Australian Broker. Her expert advice has been shared in the media over 4,000 times. Sarah holds a Bachelor’s degree in Communications and a Tier 1 Generic Knowledge certification, which complies with ASIC standards. See full bio

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