Frequently Asked Questions around “what is Specialist Disability Accommodation and what is the NDIS?”
What is SDA Property
Specialist Disability Accommodation ‘SDA’ is for people with a disability who requires special housing needs to ensure they are able live independently within our communities and also receive support they require, whilst at home in specially designed or adapted homes to help deliver their support needs.
What is SDA Funding under the NDIS
The funding for Specialist Disability Accommodation is to provide an investor with an above average rental income for putting their hand up to provide SDA accommodation. Returns (yields) of 12% up to 16% are commonplace with a SDA Property. SDA Income is linked to CPI, meaning it will go up with inflation and is a 20 year program.
If a client is assessed as requiring Specialist Disability Accommodation, funding will be included in their NDIS plan to cover any disability related housing costs that are above the ordinary costs of housing for them and their support coordinator. Funding is used to source the most appropriate accommodation in the market place for themselves.
Is the SDA Funding Here to Stay
Yes. The SDA funding under the NDIS is a legislated commitment of Australia’s Commonwealth, State and Territory governments, set out in the NDIS SDA Rules (2-18) under the NDIS Act 2013. This legislation provides the foundation for government’s long-term and firm commitment to SDA funding under the NDIS. Beyond the legislative commitment, SDA funding enables eligible participants to achieve better outcomes while representing value for money for the NDIS saving the government and tax payers a lot of money otherwise spent on accommodating the applicants themselves.
It is financially viable for you the taxpayer and our government of the day as it is estimated that to house one person with disability under current circumstances is around $1 million dollars per year. If your SDA Property is calculated to receive say $38,000 pa per participant, you are saving the government and other tax payers over $900,000 = meaning this is fully sustainable and highly viable!
How does the NDIS help Property Investors
The NDIS introduces a funding scheme to build new accessible housing for around 28,000 Australians with a disability who qualify to be a participant under the SDA. Housing is delivered through an ongoing subsidy for people with a disability to access this housing. The SDA payments drive the market-driven model where providers create and maintain housing for people with a disability across Australia with a budget of $700 million for the SDA under the NDIS.
You the investor, for putting up your hand to provide a NDIS dwelling, will receive higher than market rate yields as your incentive. The market requires $5bn to build housing through a transformational policy, totally evolving the previous government system which is failing our disabled population.
Your investment opportunity is in the 28,000 new or refurbished SDA places which are needed. Only a low 650-700 places were sadly created in the past 12 months. There is an incredible need and a very short supply. To date there are under 4,000 participants being housed in SDA accommodations.
Who qualifies for SDA Funding and Accommodation
The NDIS (National Disability Insurance Scheme) provides the SDA funding for people whose disability or ongoing very high support needs require special accommodation, which enables them to receive housing, care and onsite support by their carer.
Different Property Solutions modeled to suit varying disability categories and disabilities.
There are 4 levels of NDIS SDA home categories, each designed for a different level of disability and care :
- Improved Liveability – built to LHA Silver Level
- Designed to improve ‘liveability’ by incorporating a reasonable level of physical access and enhanced provision for people with sensory, intellectual or cognitive impairment
- Fully Accessible – built to LHA Platinum Level
- Designed to incorporate a high level of physical access provision for people with significant physical impairmane
- Robust – built to LHA Silver Level
- Designed to incorporate a high level of physical access provision and to be very resilient, reducing the likelihood of reactive maintenance and reducing the risk to the participant and the community
- High Physical Support – built to meet high level of physical access
- Designed to incorporate a high level of physical access provision for people with significant physical impairment and requiring very high levels of support
What is the difference between SDA and SIL
Supported Independent Living (SIL) is the support or supervision of daily tasks to live independently. Supported Disability Accommodation (SDA), on the other hand, is for people with disability who have severe functional impairment or highly complex support needs that require specialist housing alternatives
Who finds suitable tenants for each property?
Only a licensed SDA Rental Manager can manage the tenants and the property such as SDA Manage Australia (SDAMA) is a specialist property management firm that works with NDIS Service Providers in assisting their NDIS clients to apply for and be placed in suitable Specialist Disability Accommodation. This process starts as soon as the property has been registered with SDA and the commencement of the build, with the intention of having the property occupied as soon as possible after the property is completed.
What is the length of a typical rental lease?
Initial leases will be for 12 – 24 months where possible, but once locked in, they’ve been considered as ‘forever homes’
Sure there will be a percentage of tenants that move around, as in any other rental property. The industry feel due to massive demand and incredible undersupply of SDA Properties, tenants will hold onto their leases for as long as they can … their alternative is dismal.
What makes a forever home for NDIS tenants
NDIS homes are built to a very high standard. They do not present as a hostel or over crowded old style disability housing. These homes are built and designed above a spec home, built to accommodate and last. When it feels like a home, it is treated as their own home, looked after accordingly and no need to move.
Can you guarantee 100% occupancy?
While there is a massive demand and shortage, there are no guarantees. However, based on research undertaken, many disabled SDA residents want to “stay for life”, when they are in appropriate accommodation (mentioned above). This is why they are referred to as their “Forever Home”
Our end to end solution is deliberately set up to try ensure you have tenants in waiting upon completion of the new build, on the back of firstly building what the care providers are saying their clients need and by having excellent relationships with care providers who want their participants to be living in as normal as an environment as possible, in and amongst their communities and close to jobs and other key infrastructure you and I require.
What happens if I lose a Tenant?
Like all ongoing investment property ownership, there is always the risk of losing a Tenant. Although research has shown that once someone with a disability finds a home they are happy with, they don’t ever want to move. Once your property has been enrolled and tenanted initially, the NDIS has allowances for vacancy payments (NDIS SDA portion only). The amounts covered are for up to 60 days for properties with 2 or 3 participant rooms, and for up to 90 days for properties with 4 or 5 participant rooms, classification of disability dependent.
Tenants may move for varying reasons, but as this tenant was sourced on your behalf through existing relationships with care providers, so shall your next tenant be sourced on your behalf.
How do I receive my payments from an NDIS SDA Investment Property
The SDA payment from the NDIS is a standardised annual amount calculated based on the dwellings location, size and level of accessibility. This is on a per tenant basis.
Payments for an NDIS SDA property are paid through differently to that of a non NDIS property. Your rental payments will be paid to you from SDAMA at the end of each calendar month. Each Tenant’s payment is made up of 3 parts;
- Fair rent contribution: (25% of base disability supplement) Paid Fortnightly by the participant (tenant)
- 100% Commonwealth Rent Assistance Paid Fortnightly by the participant (tenant)
- NDIS SDA Payment (Refer to the NDIS SDA Schedule: Paid Quarterly in arrears
There are different builders building NDIS SDA Homes and there is no official building standard. A good builder will provide a quality home which is compliant with current and future compliance under NDIS SDA built to Livable Housing Australia (LHA) standards.
It takes around 6 months to build a NDIS SDA approved home (depending on in which State and weather). There are Builder’s warranties provided on structure for 6 years and other build warranties and guarantees as per any other property.
Location of NDIS housing
Proximity to transport, shops, entertainment and other essential services is critical to enabling people with disability to easily leave their homes and live a meaningful life. When investing in a NDIS home, ensure they are within close proximity to essential services and also within other ‘normal’ communities.
Who finds then manages the Tenants?
SDA Manage Australia (SDAMA) is a specialist property management firm who work with NDIS Service Providers assisting their NDIS clients to apply for and be placed in suitable Specialist Disability Accommodation. The service provider needs to be registered under the NDIS meaning your local agent who is not registered cannot manage the property. SDAMA hold the Head Lease which you sign, which then enables the property to be sublet to suitable SDA approved Tenants.
SDAMA deal with all of the SIL Providers who match suitable tenants by disability, personality and requirements. Ideally suited to specific category of NDIS property.
SDAMA charges a management fee of 10% plus GST of the gross rental income with some charging higher fees. If you take all the fees you will be invoiced for the average and fair rate is around 15% management fees. A fair SDA Rental manager will also charge only one months rent to find your tenant. The Landlord is responsible for maintenance and the tenants for damage, as per any other investment property.
A typical lease will be for 12 – 24 months. The research indicates a tenant will stay for much longer based on scarcity of this type of housing.
The SDA policy is an ambitious initiative requiring $5bn to build housing for qualified participants under the NDIS. Government cannot achieve this and thus launched the $700m a year NDIS Scheme to create an investor and user driven market. Empowering people with disability to decide where they live and who they live with.
The package of support includes annual funding to pay for the cost of their housing where the participant has a separate amount in their package to pay for their attendant care support needs to live independently in our communities.
It is anticipated that the SDA pricing and framework will continue for 20 years, after which your property will either continue to be rented to SDA participants at around 60% of the rent at that time or revert to the general market as a rental, a sale or a development site. Meaning you have options.
You enjoy a combined revenue from SDA payments, Reasonable Rent Contributions and then the proceeds from the sale value of the property when you choose to sell. The housing market is developing for people with disability accommodation needs and is highly underfunded. The NDIS is radically transforming thousands of lives for the positive, in an inflexible market where these consumers have limited choice until now.
A planned shift from segregated and institutional disability housing and a major move towards genuine choice and community inclusion through NDIS SDA property. Transformational for a person with disability. And a feel great investment for you the investor.
Is this sustainable at such high rental yields?
Research demonstrates that for the government to accommodate one person with disability and provide them with services at the same time, it costs both government and tax payers around $1 Million dollars per annum.
And for a person who lands up in a hospital disabled, whilst recovering and waiting on suitable accommodation, this person costs government and tax payers around $1,500 0 $1,500 per day to accommodate them in the hospital.
If this research is accurate or even half accurate, by you the investor receiving only $38,000 per participant per year you are saving both government and tax payer an incredible amount of money they have to spend otherwise. So yes it is financially absolutely viable.
We said it costs around $1m to accommodate one applicant in the system, this means a savings of $962,000 per annum per applicant. this is significant.
Why are SDA homes more expensive to build?
In order to meet stringent requirements under NDIS guidelines the homes included many features the house next door will not have and thus present as a higher cost to build.
These homes need to have a larger floor plan for ease of mobility, depending on the category of SDA (Robust or High Physical support etc) the homes have to include materials sound enough to withstand damage from wheelchairs or movement etc and thus require stronger materials for floors and walls etc. Some of the categories require full home automation for lights, curtains, windows and doors. Each build is customised and not cookie cut like most new builds out there build by volume builders are. Material is not purchased in bulk as done with volume builders and thus also costs more.
Based on requirements, materials used, customisation, automation, floor plan size etc the cost per square meter in no way can be compared to the new home being built next door, if you attempt to compare, you are doing yourself a complete disservice and looking for a reason not to invest in SDA property.
Capital Growth and Resale of the property
Often we are asked about capital growth, it is our logic that the property will attain the very least, land value and should achieve similar growth as per other homes around it. Aside from wider passage ways, and door ways and other features, it is very easy to turn the dwelling into one that any family could comfortably live in it. Based on this logic, we are of the opinion (opinion only) that your SDA property will escalate in value and achieve capital growth during the life of the investment.
If the location achieves say an average of 5.3% per annum, there is no logical reason why your SDA home should not achieve a similiar growth or the same growth. Yes, upfront it cost more to build and taking this into consideration, especially if sold as a SDA dwelling, your investment should hold it’s value. After 10 years it should have achieved capital growth, however investing in a SDA property one is investing for very high rental yields and secondary is the bonus of capital appreciation.
What happens after the 20 years
At the end of the 20 year program you have choice : sell the property as is, bulldoze and develop, continue to rent the property to SDA participants at around 60% of the rent at that time, or rent to the open market as the homes are not too dissimilar to other homes in the same suburb.