Mark Fowler (23 September 2014)
The Commonwealth Government has enacted amendments to the National Rental Affordability Scheme Regulations 2008 (Cth) that will have an impact on existing and forthcoming Approved Rental Dwellings under the National Rental Affordability Scheme (NRAS). The amendments commenced on 23 September 2014. A brief overview of certain aspects of the amendments is as follows.
Overview
The Explanatory Statement (ES) accompanying the amendments clarifies:
- That the Regulation implements a “use it or lose it” approach to NRAS reservations of allocation which addresses the fact that some applicants under the Scheme frequently do not meet agreed dates by which dwellings should be available for rent.
- That NRAS Incentive periods (the ten year period during which an approved participant may receive an annual incentive in respect of a dwelling) are strictly to start no later than 30 June 2016 or by an earlier date agreed with the Secretary, subject to new limitations on the circumstances in which a new date can be agreed.
- That for reservations of allocation offered following the call for applications made on 18 April 2013 (the ‘Shovel Ready Round’ of NRAS, which sought rapid delivery of dwellings), the latest possible rental availability date that can be agreed to is 31 July 2015.
- The conditions of eligibility for payment of incentives;
- That an approved participant is required to lodge a Statement of Compliance regarding an NRAS year (short for National Rental Affordability Scheme year, 1 May–30 April) for which they wish to receive an incentive by 30 June of the following NRAS year;
- That reservations of allocation or allocations can be withdrawn or revoked where an applicant or approved participant provides false or misleading information or fails to include information that the applicant or approved participant ought to have known was relevant in certain applications under the Scheme; and
- That endorsed charitable institutions may now elect to receive incentives either as a tax offset certificate or as monetary payments.
Please note this is an indicative (and not exhaustive) coverage of the changes.
Changes to Allocations
Additional requirements are imposed in relation to the making of applications for variations to an NRAS allocation, including the requirement that commercial arrangements surrounding the application be disclosed. A three month transitional period from the commencement of the Regulation applies (being 23 September 2014), after which Approved Participants may not request any further variations to the location and style of an allocation (with some limited exceptions). Thereafter Approved Participants are only permitted one further application for an extension of the dates by which a dwelling must be tenanted.
Effect
Approved Participants may wish to review their existing contractual arrangements (both with developments entities and investors) to ensure such contracts are consistent with the new laws. Particular regard should be had to any conflict between an existing contractual undertaking and the new statutory requirements with a view to ensuring that the parties:
- are not locked into performing the repealed law by their contract; and
- that the contract allows sufficient leeway for performance of the new regulatory obligations without breaching their contractual obligations.
As noted above, the amendments take effect from 23 September 2014. Please contact us if you require advice in reviewing your existing contractual arrangements.
DISCLAIMER: This update contains general information only. The information is not all inclusive and should not be considered to be legal advice. You should always obtain legal advice for your specific circumstances before relying on general information.