July 1, 2026, marks the end of the National Rental Affordability Scheme, a federal program that once supplied more than 35,000 affordable rental homes across Australia. Introduced by the Rudd government in 2008 to combat declining affordability, the scheme was terminated by the Abbott government in 2014, with no new dwellings approved after 2016. The final 3,600 properties exited the scheme this June.
What Did the Scheme Deliver?
The scheme provided indexed tax incentives to developers, equating to over A$13,000 per dwelling by 2026, in exchange for renting new properties at less than 80% of local median rents. Tenants eligible were those with incomes too high for social housing but generally below state median income, including essential workers like teachers, cleaners, and childcare workers. The scheme aimed to boost supply for this overlooked group.
More than half of all incentives went to charitable organisations, ranging from 73% in Victoria to 32% in South Australia. Dwellings tended to be smaller—over half were apartments or studios, and more than two-thirds were two-bedroom or smaller.
Windfall Gains or Necessary Incentive?
Some commentators, including the Grattan Institute, argued the scheme provided windfall gains to developers. However, the incentive more than compensated for the 20% discount on market rents, and the bulk of properties (over 22,000) left the scheme between 2022 and 2024. Little research exists on tenant outcomes post-scheme, but many private landlords likely raised rents to market levels, hitting tenants with 20% or more hikes. Tenants in community housing provider properties may have retained subsidies.
Lessons Learned
A 2016 evaluation by the Australian Housing and Urban Research Institute, led by the author, identified positives: the scheme supplied affordable housing to a low-to-moderate income cohort, accelerated supply in a short period, and delivered dwellings well distributed across cities. Incentives could be combined with other subsidies, aiding community housing providers.
Negatives included: overly complex administration split between federal and state processes; the ten-year period was too short for institutional investment; unintended outcomes like significant funding of student accommodation; and the standard incentive skewed development toward smaller dwellings.
Is There a Replacement?
The federal government has increased affordable housing funding through the Housing Australia Future Fund, but it hasn't delivered as quickly as the National Rental Affordability Scheme. There remains significant unmet need for households with incomes too high for social housing but too low for decent private rentals. The community housing sector is moving into this space, but direct government funding is needed.
According to the author, it is surprising state or federal governments haven't introduced a replacement for the scheme—minus the problems—to leverage private sector investment into newly built affordable housing. Such a program could provide opportunities for those on incomes insufficient for home ownership support but too high for social housing.
