Stirling, Australia -- (SBWIRE) -- 06/12/2014 -- The National Rental Affordability Scheme (NRAS) is primed to be cancelled in the Abbott government’s new federal budget.
Prime Minister Kevin Rudd launched the program in 2008 as a social housing project, intended to create low-cost dwellings for city workers. Teachers and child care staff reaped benefits from the program over the last few years.
When asked the reasoning behind this change, Social Services Minister Kevin Andrews remarked, “There has been a poor delivery rate in the NRAS. It was obviously rushed in its design and implementation. It’s been used inappropriately for the housing of international students rather than the people it was designed to help.”
In addition to providing low cost rental apartments, the scheme also built 20,000 new units and houses over the past 6 years. Many were built or run by community organisations.
Incentives in this program are beneficial to property owners, who received $10,000 per year for each dwelling that was rented out to Australian tenants at a lower rent.
Renting Vs. Home Ownership
Many people prefer to rent a home or apartment instead of purchasing their own home because they believe homeownership is out of reach. Renting seems less risky and more secure, while homeownership sounds like a distant dream.
Yet with the collapse of schemes like NRAS, renting is less rewarding.
Renting is prohibitively expensive in major cities, but many people feel it is the only option. When comparing the overall cost of owning a home to renting, many people get scared away by the home’s initial purchase price. Others are worried about the ongoing financial responsibility of a mortgage.
Benefits of Homeownership
Unlike purchasing a home, renting doesn’t build wealth. Home owners can proudly flaunt their life’s most important asset, while renters have nothing to show for all the money they put into their dwellings. As individuals pay off their mortgages, they can gain wealth in equity.
Monthly rental prices can increase every year, while your monthly mortgage rates can be fixed at the amount that is most comfortable. The price of the property is conversely fixed from the date of purchase. This means by the time a home is paid off, it is often worth more than the original amount put into it. The home can later be resold for a higher initial price, generating wealth for the home owner.
Financing a Home
Everyone’s financial situation is different. While homeownership has many more long-term advantages, it requires proper budgeting and planning. Even aside from the NRAS, individual states have schemes including grants and first time home owner benefits that are designed to make property purchases less of a burden.
It is always best to check with a financial advisor or mortgage broker before deciding whether or not to purchase a new home. Contact Aveling Homes to learn about financing options for your first property purchase.
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