BHC Introducing NRAS e-book

INTRODUCING

NRAS www.bhcl.com.au www.nrasbrisbane.com.au

THE NEED FOR NATIONAL RENTAL AFFORDABILITY To help alleviate the rental crisis facing Middle Australia the Commonwealth and State Governments are working together on the jointly funded initiative National Rental Affordability Scheme (NRAS).

BHC has welcomed the opportunity to be part of this initiative that aims to deliver 50,000 NRAS dwellings through the creation of a new residential property asset class for investors.

To meet with the allocation, BHC is delivering dwellings across Brisbane City comprising of spacious studios, one bedroom, two bedroom and three bedroom units.

NEROLIE’S STORY I have lived in New Farm/Fortitude Valley for over 5 years... I have slowly been priced out of the area. The NRAS program has meant that I can still afford to live near work.

To help alleviate the rental crisis facing Middle Australia.

THE NRAS OPPORTUNITY The National Rental Affordability Scheme has four primary goals: • Increase the supply of new rental housing • Improve rental affordability for eligible tenants • To stimulate development • Encourage investment in affordable housing Source: www.fahcsia.gov.au/our-responsibilities/housing-support/programs-services/ national-rental-affordability-scheme This has created an unprecedented opportunity for Australians to invest in the property market and benefit from generous tax-free financial incentives.

• The tax free incentive is not based on the investment property value • Standard tax arrangements associated with investment properties still apply • More than $100,000 of tax free incentive over 10 years *Conditions apply

NRAS tenants tend to be key workers such as child care workers, nurses, police officers, fire fighters and paramedics.

Through the NRAS scheme the Commonwealth and State Governments are offering a combined tax free incentive of $10,350 per year (at May 2013) for a period of 10 years to investors buying a NRAS property.

Commonwealth Government Source: http://www.environment. gov.au/housing/nras

This incentive is indexed to increase with the rental component of CPI and is made available to investors each year in return for entering into a NRAS agreement that offers discounted rents to eligible tenants.

Eligible tenants may be individuals, couples or families that have an income less than the initial income limits referred to below.

NRAS ELIGIBILITY THRESHOLDS FOR TENANTS INITIAL INCOME LIMIT

UPPER INCOME LIMIT

(AT COMMENCEMENT OF THE TENANCY)

(THROUGHOUT THE TENANCY)

One adult

$45,956

$57,445

2 adults

$63,535

$79,419

3 adults

$81,114

$101,393

Sole parent with 1 child

$63,579

$79,474

Sole parent with 2 children

$78,822

$98,528

Sole parent with 3 children

$94,065

$ 117,582

Couple with 1 child

$78,778

$98,473

Couple with 2 children

$94,021

$117,526

Couple with 3 children

$109,264

$136,580

HOUSEHOLD TYPE

Source: www.fahcsia.gov.au/our-responsibilities/housing-support/programs-services/national-rental-affordability-scheme All tenants are required to meet BHC eligibility criteria as well as satisfying the standard RTA requirements.

FINANCIAL ADVISOR If you invest in an NRAS property today, you can take advantage of all the normal negative gearing benefits as well as receiving a tax free incentive from the Government for the next ten years... what a bonus!

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INVESTING IN NRAS PROPERTIES Possible benefits of investing in BHC NRAS properties include:

• Rental Yield • Allowable tax deductions • NRAS Tax Free incentive • Capital Growth** **Subject to market forces

Rental Yield Under the NRAS scheme, an investor may expect to receive a discounted rental yield from their investment property. For example if the rental for a one bedroom unit in an inner city location is $400 per week, the discounted rent payable by the tenant will be a maximum of $320 per week (at least 20% less than market rent for the area).

Allowable Tax Deductions As with typical investment properties, a range of expenses (e.g. management fees, rates, body corporate charges) and non cash amounts (e.g. depreciation of plant and equipment and amortisation of borrowing costs) may be permitted as allowable deductions against the income generated from the property, subject to personal circumstances.

NRAS Tax Free Incentive In return for providing a rental property at a discounted rate, a tax free incentive will be provided to the investor each year for a period of 10 years whilst their unit is part of the scheme.*** This tax free incentive ($10,350 as at May 2013) is indexed to increase each year with the rental component of CPI. The incentive is paid in two parts, a $7,763 refundable tax offset certificate from the Commonwealth Government and a non-taxable cash payment of $2,587 from the State Government. ***Subject to compliance with the NRAS Act and NRAS Scheme.

Capital Growth As with a standard dwelling or investment property, NRAS properties may stand to gain in value in accordance with the capital growth rates of the suburb in which they are located, subject to market forces.

NRAS is not social welfare housing and the Australian Government has no legal or equitable claim over NRAS properties.

NRAS AND BHC As specialists of mixed tenure projects, BHC’s years of experience in property development has resulted in the accumulation of an impressive portfolio of wellmanaged and maintained properties.

To comply with Government criteria for NRAS certification, BHC ensures that their developments are well positioned in solid growth, low vacancy locations close to employment, schools, shopping centres, hospitals and transport.

NRAS housing is no different from standard dwellings. Therefore, all BHC NRAS properties share the same quality design, build and finish as properties sold to non-NRAS investors or owner-occupiers - making them attractive, livable and good for resale.

BHC has a strong financial base with net assets in excess of $250m. It is the largest housing provider in Queensland with close to 1,500 dwellings currently under management.

MARK – FINANCIAL ADVISOR

As well as excellence in property development, BHC has demonstrated excellence in housing management.

It’s this demonstrated excellence that results in low vacancy rates and successful communities. This is good news for investors looking for a one-stop-shop partner to manage their NRAS investment.

NRAS offers all the benefits of a normal property with the added annual Government incentive making it a suitable investment strategy for almost everyone.

BHC - WORKING FOR YOU As the developer and property agent BHC plays a pivotal role in managing your investment. An agreement with BHC is hassle free and has a simple, competitive fee structure – 14% + GST of the actual rent received. This means that BHC will take care of every aspect of managing your investment property, giving you peace of mind. BHC also continues to own and manage a percentage of units in each of its developments giving it a vested interest in maintaining the quality and sustainability of each property.

BHC’s NRAS allocation is constantly being updated.

Talk to BHC today about the opportunity to invest in a NRAS property.

BHC MODEL

Investor Sales contract NRAS agreement

BHC Developer/Project manager

Property owner within each site

NRAS compliance manager

Tenancy manager

Property manager

BHC Developer

Australian Government

Tenant

Building contract

NRAS Compliance

RTA Tenancy agreement

FREQUENTLY ASKED QUESTIONS What’s in it for me?

Tax free incentives for 10 years from the Commonwealth and State Governments totaling $10,350 (as at May 2013) per annum. These incentives are indexed to increase each year in line with the rental component of CPI.

Why buy NRAS instead of a traditional investment property?

A) $10,350 tax-free incentive per annum.

B) Possible higher net returns resulting in lower costs to investors.

How will I receive the tax-free incentive?

The full $10,350 is payable regardless of annual earnings for the number of years of investment in the NRAS scheme.

The incentive is paid at the end of each tax year in two parts • 75% (currently $7,763) as a Refundable Tax Offset Certificate from the Commonwealth Government • 25% (currently $2,587) as a non taxable cash payment from the State Government • These payments are usually made in or around June/July each year.

How many NRAS dwellings are planned for?

There are 50,000 allocations planned throughout Australia.

Why buy from BHC? BHC is ‘the one stop shop’ they: • Develop the mixed tenure product in growth areas around Brisbane • Sell the dwelling to the investor • Tenant the dwelling • Report for the investor in order to ensure they receive their government incentives each year • Have a rental roll in excess of $9.5 million • Offer investors a variety of dwellings and pricing solutions based on location, composition and built product • Offer fees that are all inclusive and very competitive

What is the NRAS agreement?

BHC manages the property through the NRAS agreement to streamline the process for the investor.

Can I purchase NRAS through a Self Managed Super Fund?

Yes, you most certainly can. Please speak to your financial advisor on how to set this up.

What is the fee for this – management fee?

It is 14% (plus GST) of the actual rent received. There are no additional letting or reporting fees.

What is market rent vs. NRAS rent?

An NRAS dwelling will be placed into the letting pool whereby the tenant will pay at least 20% less than the market rent; e.g. Market rent is $400, NRAS rent will be a maximum of $320.

Why at least 20% less than market rent?

This is a requirement of the NRAS scheme. New dwellings are required to be rented at a minimum discount of 20% to market rent to eligible households as based on the Eligibility Thresholds.

What lenders can I use?

NRAS investments are gaining a better understanding by a variety of lenders across the nation and more and more are coming on board with the product. Please speak to your lending professional for more information specific to your circumstances.

Can I buy more than one?

Yes. You will receive the same incentives per investment property.

For available properties visit: www.nrasbrisbane.com.au

Can I sell this NRAS property at any time?

Yes you can, where properties change ownership mid year the NRAS benefit is prorated to the ownership period of each owner. Reasonable notification periods apply.

Can I remove my property from the NRAS at any time?

Yes you can, investors who wish to exit the scheme can do so by giving six months notice to BHC who will make arrangements to relocate their tenants.

How will my property be managed?

BHC manages all tenancies through a standard Residential Tenancies Agreement. The same rules regarding maintenance obligations and responsibilities of tenants apply to NRAS tenants as they do to other tenants in the private market.

For more information on the scheme, please visit: www.fahcsia.gov.au/our-responsibilities/housing-support/programs-services/national-rental-affordability-scheme *Subject to the provisions of the NRAS Act and NRAS scheme

Lvl 2, 35 Astor Terrace Spring Hill QLD 4000 GPO BOX 544 Brisbane Q 4001 p. 07 3307 3000 f. 07 3839 2000 e. reception@bhcl.com.au ACN 101 263 834 trading as BHC Creating Liveable Communities

BHC takes this opportunity to acknowledge the funding received from the Commonwealth Government and Brisbane City Council and the continued support of all our community shareholders.

DISCLAIMER: This document has been prepared for promotional purposes only.

Whilst every effort has been made to ensure its accuracy, the material included is indicative only and is subject to change. You should not rely on any information contained in this material and should make your own independent investigations to satisfy yourself as to the correctness of any statements or representations before you proceed with any deal in relation to the this document. Brisbane Housing Company Ltd and their agents disclaim any responsibility and liability for any loss or damage or claim whatever nature or kind to any party arising out of any reliance on the information contain in this document.