First things first. Just what is the NDIS?
The NDIS, or National Disability Insurance Scheme, is a scheme introduced by the Australian government to provide support to people with disabilities, their families, and their carers.
Jointly governed and funded by the Federal and State/Territory Governments, the NDIS was launched in mid-2013 as a trial phase known as the NDIS Launch. The scheme began in 2016 and is now available in all states and territories.
The NDIS will provide more than $22 billion worth of funding between 2022-2027 on an annual basis to approximately half a million Australians who are either permanently or significantly disabled. There are currently 4.3 million Australians with a disability. For many, the $110 billion worth of government funding will be received by many as their first-ever government payment.
Due to the 4.3 million Australians suffering from a disability, the government has identified a severe lack of suitable properties available. More worrying is that this applies to a large amount of younger people with permanent disabilities meaning this will be a long-term requirement for appropriate housing.
To counteract the shortfall, the Federal Government has committed to paying the rental costs of said people above for the next 20 years with significantly higher rental yields, upwards of 10%, expected to provide over $700 million annually.
Given the significantly higher rental yields, this will provide investors with the confidence required to invest in the scheme, generating a crucial uplift in the number of SDA homes.
What is Specialist Disability Accommodation (SDA)?
One of the purposes of the scheme is to provide Specialist Disability Accommodation (SDA) which has been designed for disabled people with high support needs and functional impairment that is deemed to be extreme. SDA housing provides residents with features that allow them to live more independently and make it easier for support to be safely delivered and more efficiently. SDA aims to improve, maintain or prevent one's functional capacity from worsening, reduce future support needs and create better connections with their family, community, health services, education, and, if possible, employment.
Why is this a great investment opportunity?
If you are searching for a property investment that makes you feel just as good as the return it promises, this may be a great investment opportunity. You are not just providing a comfortable home to accommodate someone with a disability, there is also a significantly higher-than-average market rent with yields of more than 10% and in some cases up to 15% when dwellings are fully let with approved NDIS SDA participants.
What are the 4 Specialist Disability Accommodation design categories?
The NDIS will examine four accommodation categories when deciding whether to fund the property. They are:
- Improved liveability
This means accommodation with improved physical access. It also includes design features that assist with cognitive, sensory, and intellectual impairments, such as a ramp rather than stairs to enter the property, brightly painted walls, or allowing the tenant to see easily.
- Robust
This refers to the purpose-built property to keep tenants and others safe within the home. Their impairment may result in them causing damage to the property, so the property needs to be robust.
- Fully accessible
This design is for people with severe physical impairments, so the property needs to be built to allow access using devices such as lifts or ramps.
- High Physical Support
Again, like fully accessible properties, these properties need to be designed to allow for ceiling hoists, backup power supplies, or technology that allows for home automation and communication (Think Alexa).
How to get approved for an NDIS SDA Investment Loan?
To get a loan approved for an NDIS SDA accommodation, you need to:
- Look for an SDA-compliant builder familiar with the participants' needs.
- Have a respectable credit history and an excellent credit score.
- While constructing or renovating, make sure it has an adaptive design that can accommodate people with different disabilities.
Who is eligible for Specialist Disability Accommodation?
- A person who has a permanent disability that significantly affects their ability to participate in daily activities, such as getting in and out of bed, getting dressed, moving around, preparing meals, accessing the community, etc.
- A person between the ages of 7 and 65.
- An Australian citizen/PR/ Protected Category Visa.
- Resident of Australia.
How do investors connect with NDIS participants?
The NDIA expects SDA providers to develop and utilise various methods to advertise their SDA vacancies. Many will be market-specific. Some common methods of advertising a vacancy will include:
- the NDIA’s provider finder
- through local networks
- on their organisation’s website
- accessing one of several emerging web-based/e-market platforms that offer matching and the exploration of vacancies by tenants
- through local known support coordinators and their networks.
- outsourcing to a third party contracted to manage tenancies (such as a real estate agent).
Some large SDA providers may pool some payments to fund a vacancy management team for their SDA portfolio. These teams may operate like more centralised approaches delivered by state and territory governments under previous systems. Some SDA providers may engage a third party to manage their vacancies and tenancies, as is most often in the mainstream housing market.
The Federal Government supports the funding and provides the investor a guaranteed and secure income stream.
What properties can be built for NDIS?
Under the NDIS scheme, you can construct apartments, villas, duplexes or townhouses, stand-alone houses, and group homes.
- In a residential building, apartments are separate self-contained units.
- Ideal for up to three residents, villas, duplexes and townhouses are separate semi-attached properties within a single land title or strata-titled area.
- Houses should be located on a clearly defined land area (delimited by a fence or hedge) and cannot have standard roofs, walls, entrance areas, driveways, parking lots, etc.
- If there are four or five participants, group homes are ideal.
The above can be considered a group home as long as many residents live there.
What are the design restraints?
The property's design restraints must align with the following:
- The property should be a permanent dwelling and not a mobile home.
- One participant should be offered long-term accommodation.
- The Commonwealth, a state or a territory cannot already fund an accommodation under a scheme unrelated to a disability.
- Tenant should not have already received funding from the National Disability Insurance Agency (NDIA).
- It should meet the requirements for new build, existing, or legacy stock in the SDA rules, NDIS, and price guide.
- All buildings and dwellings should have all of the following elements:
- Kitchen
- Bathroom
- Living/dining area
- Entrance/exit
- Bedroom
