Strengths and Limitations of the National Rental Affordability Scheme (NRAS)

This article discusses the strengths and limitations of the National Rental Affordability Scheme (NRAS) in improving the housing situation for low-income groups. It explores the impact on rental stress, government finances, employment, income levels, and social welfare. The article also highlights the involvement of Horizon Housing and the need for more efficient implementation. However, it also addresses the potential negative effects on middle-income groups, market rent rates, and property developers.

Running head: POLITICAL SCIENCE
Political Science
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Table of Contents
Strengths.....................................................................................................................................2
Limitations.................................................................................................................................3
References..................................................................................................................................4

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Strengths
The policy solutions will reduce rental stress of the low-income group and thereby
improve their health and quality of life. Making the maximum income threshold for eligibility
lower will result in lesser number of middle-income people under NRAS (Yates, 2013).
Therefore, government has to address housing issues of lesser number of people, only low-
income groups will be under the scheme. The money spent for middle-income group
previously will be in the hand of government as surplus. It can be used to finance more
subsidy required to make more community houses under NRAS as a result both low-income
groups and property developers will be benefitted. Under NRAS 2.0 government will make
more community houses in collaboration with Horizon Housing. Therefore, construction
business will experience a sudden growth and will result in increased employment. As
employment will rise, income level of people will increase. With rise in income, many people
will be elevated to middle income group from poor income group and standard of living will
also improve. Government will also receive tax due to increased income in the form of
income tax and this revenue generation will have a positive impact (Berry & Hall, 2005).
There will be more community houses with more discounted rent available for the needy
people, which will help them in coping up with the adverse financial condition. With the
decrease in rents, affording houses on rent will be easier and savings will be more. This will
enable the government to increase its economic growth and recover from the burden that low
income group is posing on the economy. Overall, the financial status of the people will
improve, which will have positive impact on health and emotion, thus the reduce stress of the
population. This will make people happier and increase the social welfare of the country. In
the current version of the scheme, Horizon Housing has been involved. It manages a great
number of properties of NRAS in Queensland, thus, it has past experience and understands

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the shortcomings of the current policies, and thus it will work effectively and implement the
NRAS 2.0 more efficiently.
Limitations
The policy solutions suggest to reduce the maximum income threshold (currently it is
$64,248 for one adult) for eligibility which will disable many middle-income group people
from availing houses on rent under NRAS and are forced to avail houses on market rent
without discount (Qld.gov.au, 2019). Hence, the rentals stress level on middle-income people
increases. Many housing providers are offering lower rentals even before the implementation
of the new policies and giving rise to rent mismatch between current NRAS discount rate and
market rate. This will adversely affect the market rent rate evaluation and lead to policy
inequity. Banks will not be interested to fund NRAS property developers as the policies is not
clear to them and the market rent competition will create negative impacts on banks
(McAuliffe, 2011). However, perceiving the growth in demand, property sellers will charge
more from the customers and give rise to more exploitation.

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References
Berry, M., & Hall, J. (2005). Institutional investment in rental housing in Australia: A policy
framework and two models. Urban Studies, 42(1), 91-111.
McAuliffe, B. (2011). Implications of the National Rental Affordability Scheme on the
valuation of residential property. In Proceedings of The 17th Pacific Rim Real Estate
Society Conference. Pacific Rim Real Estate Society.
Qld.gov.au (2019). National Rental Affordability Scheme (NRAS) | Homes and housing |
Queensland Government. [online] Qld.gov.au. Available at:
https://www.qld.gov.au/housing/renting/rent-assistance/nras [Accessed 4 May 2019].
Yates, J. (2013). Evaluating social and affordable housing reform in Australia: lessons to be
learned from history. International Journal of Housing Policy, 13(2), 111-133.