The proposal is to introduce a scheme to encourage large‐scale institutional investment in affordable rental housing through the provision of annual financial incentives to investors if the investors comply with certain conditions.  The conditions include that:  

• the rent charged is at least 20 per cent below the market rent for the location of the dwelling
• the tenant meets an income test.

The operation and eligibility conditions of this scheme would be similar to those for the current National Rental Affordability Scheme which started on 1 July 2008 and offered annual incentives for a period of 10 years, but which is no longer taking new investments.

Under the proposal, the maximum number of eligible dwellings would be progressively increased over 10 years to reach a cumulative total of 250,000 according to the following profile:

Annual incentives would be paid for each dwelling for 15 years.   

The initial value of the incentive would be set at $8,500 per dwelling and would then be indexed each year in line with movements in the rental component of the consumer price index (CPI).   

Incentives will take one of the following forms.

• For institutional investors liable to pay tax, the incentive would be in the form of an annual refundable tax offset administered by the Australian Taxation Office (ATO).
• For institutional investors not liable to pay tax, such as not‐for‐profit organisations, the incentive would be an annual non‐taxable grant payment. This payment would be administered by the Department of Social Services (DSS), which would also have overall responsibility for the scheme.

Priority access to new properties will be given to residents of existing National Rental Affordability Scheme properties which are no longer eligible for incentive payments.  

The scheme was announced in December 2018 and would commence on 1 July 2019.