In Defense of the National Rental Affordability Scheme

The National Rental Affordability Scheme (NRAS) is not a saviour on its own, but is a vital component of solving Australia’s housing supply and affordable rental crisis, writes NFP expert Adrian Pisarski and Graham Wolfe from the Housing Industry Association.

Adrian Pisarski.

While the great majority of Australians are mainly well housed, we continue to face a housing supply shortage, more critically in affordable rental housing. For our poorest households options are few and diminishing, contributing to unacceptable levels of homelessness.

The National Rental Affordability Scheme (NRAS) was introduced in 2008 to help combat this persistent and pernicious issue, not of itself, but as part of a new National Affordable Housing Agreement with attendant National Partnership Agreements on homelessness and social housing.

NRAS has recently been criticised for housing international students and for other perceived flaws in its implementation. Some adjustments may be warranted but we risk throwing the baby out with the bathwater.

Of the 19,000 properties it has built to date, 1400 are tenanted by International students – a not insignificant 7 per cent. All NRAS properties are income tested and are occupied by low and moderate income households. It will eventually build 50,000 properties targeting an acute need.

NRAS is a success story and deserves considerable praise for its wins even if it has some easily addressable flaws that had it been implemented as originally proposed by the Affordable Housing Summit Group, may have been avoided.

NRAS generates building activity and provides homes for households who struggle to achieve affordable rental in specific markets. It addresses critical problems in the makeup of our housing, especially critical supply shortages.

It does so by drawing private investment, at scale, from modest government incentives, to a market which had failed to provide an adequate supply of affordable rental property. It is building institutional investment in residential property correcting a deficiency in Australia’s residential property profile.

NRAS is income tested. All tenants must first be eligible and in Queensland, where no International students have been housed, this includes having residency status. This policy could be extended to other jurisdictions.

Its original targets were ambitious, yet it has exceeded expectations in take-up and progress, especially as it was introduced during the global financial crisis which stymied capital investment and made raising finance extremely difficult.

It has supported the development of partnerships between community housing providers, charities and the private sector and leveraged land, capital, debt and other inputs which would never otherwise have been realised.

It supports the development of mixed tenure communities, helping to tackle the problems of concentrated social housing developments which still mark our housing landscape. Some student housing could be appropriate at controlled levels in those approaches.

Investors and developers now welcome NRAS after a slow start and are looking for a reliable, predictable program to expand it.

NRAS is not a saviour on its own, but is a vital component of solving Australia’s housing supply and affordable rental crisis. Based on its take-up, its ability to create investment and new housing form, NRAS warrants government support to build on its successes and address its shortcomings.

About the Authors: Adrian Pisarski is the Executive Officer of National Shelter and a member of the Affordable Housing Summit Group, which proposed a National Affordable Rental Incentive, on which NRAS was based.

Graham Wolfe is the Chief Executive Industry Policy and Media for the Housing Industry Association, HIA and is also a member of the Summit Group.