What it does
The National Rental Affordability Scheme Act 2008 establishes the legislative framework for the National Rental Affordability Scheme (NRAS), a Commonwealth initiative designed to encourage large‑scale investment in housing by offering incentives to approved participants. The object, set out in section 3(1), is twofold: to increase the supply of affordable rental dwellings, and to reduce rental costs for low and moderate income households. The Act achieves this by requiring the regulations to prescribe a Scheme (section 5) that governs the approval of participants and rental dwellings, the provision of incentives, and a range of ancillary matters. The incentive itself comes in two forms defined in section 4: a National Rental Affordability Scheme Tax Offset (the mechanics of which are set out in Division 380 of the Income Tax Assessment Act 1997), and an amount payable for an NRAS year. Each allocation of an entitlement to receive an incentive attaches to a specific rental dwelling for a 10‑year incentive period that must start on or after 1 July 2008 (section 4 definition of ‘incentive period’). The Act mandates that the Scheme must provide for the Secretary to make allocations on conditions set out in section 7: the dwelling must be new or have been substantially renovated and not previously occupied (subsection 7(2)(a)), rent must be charged at least 20 per cent below market value rent when the dwelling is rented (subsection 7(2)(b)(ii)), the dwelling must be rented to tenants of a kind prescribed by the regulations (subsection 7(2)(b)(i)), and any vacancy periods must not exceed a prescribed maximum (subsection 7(2)(c)). The Secretary may also decide to disapply the 20 per cent discount condition in certain circumstances if satisfied that doing so will not increase rental costs for low and moderate income households (subsection 7(5)). The Act further provides for variations, transfers and revocations of allocations (section 8), and for the Secretary to issue certificates for tax offsets or make payments to approved participants (section 9). A compensation mechanism is included in section 10 in the event that the operation of the Act results in an acquisition of property otherwise than on just terms, and the Act establishes a system of enforceable written undertakings (sections 10A and 10B) as an administrative compliance tool.