This research explores the lessons that can be learnt from the National Rental Affordability Scheme (NRAS), which stimulated the supply of affordable rental housing for low- and moderate-income earners, and makes recommendations on how to design and fund a new scheme to deliver the supply of affordable rental housing required in Australia.

By June 2015, NRAS had delivered 27,603 dwellings with a further 9,980 to be delivered, 76 per cent of which were in major cities. Dwellings were delivered across a variety of housing types including apartments (39%), separate houses (22%), studios (17%) and town houses (22%). The variety of dwellings delivered was a very positive outcome. Dwellings were delivered in suburbs with a range of socio-economic characteristics and with generally good-quality transport infrastructure. 

Subsidising rents to 20 per cent below market levels, the NRAS model not only increases the number of suburbs accessible to income-eligible households but, if such a discount were available to all eligible households, would lift a third of them out of housing stress. NRAS, discontinued in May 2014 after almost six years, was an effective supply stimulus, delivering tens of thousands of units in a relatively short timeframe. Concerns about complex administration, poor targeting and administrative delays resulted in the discontinuation of the scheme just when momentum and private-sector investor confidence was building. 

Strengths of the scheme included: the ability to combine subsidies from a variety of sources; the level of engagement from the community housing sector and from private investors, particularly in the later rounds; the variety of dwelling types and sizes delivered; and the level of innovation it generated within the industry. The weaknesses were its administration and lack of longevity.