NDIS Investor
How does the NDIS help Property Investors?
The NDIS SDA funding scheme will provideaccessible housing for those Australians with a disability who require specialised housing. Housing is delivered through an ongoing subsidy for people with a disability to access housing. Before NDIS was implemented, the funding for housing people with disabilities mostly came from governments or non-profit providers using upfront capital grants. As banks have started to become lenient and are lending to finance SDA projects, there is a growing appetite among investors for investing in SDA housing projects. As at today, out of the over 500,000 Participant
in the NDIS, an estimated 30,000 of them qualify for SDA. Currently there are around 14,000 people in accommodation that is inappropriate for them, because it doesn’t meet their needs, they are isolated from the community, and they really have no choice. These 14,000 are likely living in residential aged care, government housing, hostels or with family in unsuitable situations (inappropriate design, living with aging parents, etc)
Additionally, there is a need to replace existing old homes with contemporary SDA. This means the real demand for new housing
could be considerably higher than 14,000 places over the next 10 years, as current SDA tenants in basic and legacy housing look for alternative housing.
It is envisaged there will be considerably more people who will come out of the woodwork and join the NDIS program. Sadly, only around 1800 places were created in 2020. There is an incredible need and a chronic short supply. The SDA scheme is designed to address the massive under supply. Demand is not the
problem here, and if you can build the right home for the participants, then your property will not face the problem of vacancy. Furthermore, the government wants to motivate private investment of $5 billion to encourage the build of brand new residential properties built for inclusion in the scheme. The NDIS will provide $41.9 billion to over 500,000 Participants in 2023/24, growing to $89.4 billion by 2031/32. Your investment property not only provides
rental income for yourself, but it provides the perfect home for Australians with disabilities, moving them out of inappropriate aged and other institutionalised care and place them in suitable housing.
How does my investment help?
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. achieve their goals.
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. It is a planned shift from segregated and institutional disability housing and a major move towards genuine choice and community inclusion through NDIS SDA property. It is transformational for a person with disability.
What makes SDA Property Investment appealing?
The approach to SDA funding has been to make investing in accommodation designed for NDIS participants both commercially viable and attractive for investors. A summary is as follows:
• The NDIS is attractive to investors who want a long term, steady income, while receiving significant yields.
• Gross rental yields of up to 25% on the high end, and 10% gross yields on the low end. However after costs, investors should expect an average 8-15% pa net return just to be conservative, as it depends on many factors.
• A PropertyinDemand recommended NDIS property prices start from around $500,000 and can range up to $900,000, as an approximate figure. It all depends on land prices in the area selected, and the inclusions required for the different category of participants living within the SDA home.
How is the build quality?
A good builder will provide a quality home which is compliant with current NDIS SDA built to Livable Housing Australia (LHA) standards. It takes around 10-12 months to build a NDIS SDA approved home. Whilst builder’s warranties provided on structure vary between States and Territories, they are for typically in place 6 years and other build warranties and guarantees as per any other property.
Where can I build a SDA home?
The land and location must meet SDA requirements, so not just any block in any location will be suitable. Example, there are rules around how much slope the land can be to be eligible as a NDIS property. Proximity to transport, shops, entertainment and other essential services is critical to enabling people with a disability to easily leave their homes and live a meaningful life. When investing in a NDIS home, ensure they are within close proximity to amenities such as
health care, employment hubs and transport. PropertyinDemand ensures our SDA House & Land packages are being built where demand is.
Why are SDA homes more expensive to build?
In order to meet stringent requirements under NDIS guidelines, the homes include 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 and thus require stronger materials for floors and walls.
Some of the categories require full home automation for lights, curtains, windows and doors. 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 metre in no way can be
compared to the new home being built next
Are these new SDA homes overpriced?
The answer is NO. A NDIS home is priced as
a non SDA home would be. The construction
price will depend on the cost of labour and
materials required to build a SDA home.
At what stage is my property eligible for enrolment?
Under current NDIS SDA policy, the enrolment application commences as soon as you have received the certificate of practical completion from your builder, and we are in receipt of the required documentation.
Is there a builder’s warranty for the property, and if so, how long?
Yes, each home is offered a 6 to 7 year structural builder’s warranty dated from practical completion. This warranty covers structural
items and faults of original workmanship.
Is there an expected warranty for fixtures and fittings?
There is normally a 6 to 12-month maintenance period on construction so any maintenance issues or defects that come to light within this period are the responsibility of the builder to fix and repair, at no additional cost to you. Fixtures and fittings are covered by the manufacturer’s warranty applicable to each item e.g. Oven and cooktop.
When does SDA certification/ compliance happen?
Compliance is checked at several stages throughout the process.
1. At the plan stage Before committing to the land and build contracts, the package goes in for initial certificate-tion with the SDA certifiers. This then goes
into local council for Building approval like a normal house build.
2. At the frame stage The certifier will come to the site to ensure that the approved plan is matched.
3. At completion. Final certification will happen when the home is at Practical Completion. This process ensures the investor will be able to receive SDA
funding. Without certification, the house will never be able to accomodate NDIS/SDA Partipants and therefore will not receive the high returns.
What is an accredited SDA assessor?
The Specialist Disability Accommodation (SDA) design standards released on October 25th, 2019, superseded the Livable Housing Design guidelines that SDA had been based on until then. The release of the standards means that from 1st July, 2021, all applications to enrol a dwelling for Specialist Disability Accommodation (SDA) will be required to include a certificate from an Accredited SDA Assessor. SDA assessors will as a part of the certification
process, nominate the Design Category the dwelling satisfies based on the Design Standards.
The new Design standards mandated SDA assessors can be 1 of 4 professions:
• Builder Surveyors
• Architect
• Occupational Therapist
• Access Consultant
Is it a complicated process once the house is built, or is it easy to operate and manage?
The SDA provider is the company who is tenanting and managing the property. They handle everything. They do the monthly submission
to collect the SDA payments according to the number of Participants you have and the payment category they are in. They
(RRC) from the Participants. This is then forwarded to your account monthly (less their management fees). They also do the annual audit of the property that is required too but this is not an additional fee as it is covered by their management fee. Your experience of owning a NDIS property should be similar to owning a non-SDA property. However, you must have the experts and specialists around you to ensure you continue to receive NDIS payments.
Are these new SDA homes full turnkey packages?
Yes, they are finished and “ready to rent”. Turnkey is a word too loosely used in the building world and can in fact represent a very low level of finish (i.e. no clothesline, mailbox, gardens etc.). The builders we work with have NDIS compliant inclusions that make sure there is nothing else that is needed for the property to spend on. You of course get to go through this contract in detail with your solicitor, just like you would for any property.
Is it possible to renovate an existing home to make it SDA compliant?
If you are considering renovating an existing property, you need to consider the following points:
1. The property needs to have been issued a certificate of occupancy on or after April 1st, 2016.
2. The refurbishment must meet the minimum requirements for the selected Design category, and
3. The cost to refurbish or renovate the home must meet the minimum requirements in Appendix F-Minimum Refurbishment Costs for New Builds of the NDIS Pricing Arrangements for Specialist Disability Accommodation 2022-23. The required minimum costs to refurbish are high, making this option generally not financially viable.
What is OOA and where can it be located?
OOA refers to Onsite Overnight Assistance and is an addition to the SDA funding if included in the dwelling. This is a room that has
been included in the dwelling (House/ Villa/ Townhouse) or in the unit complex (a separate apartment or studio room). This room is for the Onsite carers to use as an office and a rest area, so it usually will include a bed for overnight carers as well as a bathroom and kitchenette if it is a separate unit. When included in an apartment complex, one OOA room can be provided to a maximum of 10 SDA units. Ie, if 15 SDA units are in the complex, 2 OOA rooms are needed for all
units to qualify for the OOA funding. In a house, villa or townhouse, the OOA room must be accessible by the Participant with required door circulation spaces applicable
