NDIS Investment
The NDIS (National Disability Insurance Scheme) is a federal government initiative designed to improve the quality of life for all Australians living with a permanent disability.
The NDIS endeavours to advance how people living with disabilities in all states and territories within Australia benefit from government support. It is open to help support all eligible candidates who have an intellectual, physical, sensory, cognitive or psychosocial disability.
A key component of the NDIS is the SDA (Specialist Disability Accommodation). SDA is a provision to accommodate people who require specialist housing solutions.
The SDA has opened up investment opportunities for private and corporate investors who wish to develop and manage the newly required specialist dwellings currently being built across the country to meet the growing demand.
Why an NDIS Property Investment Makes Sense
Approximately 4.3 million Australians are living with various disabilities. The Australian Government has committed to providing $22 Billion in funding per year to around 500,000 Australians who have a permanent and significant disability.
Since its introduction, funding has increased from $4.2 billion in 2016-2017 to $21.5 billion in 2019-2020.
For many Australians, this has been the first time they have received the necessary funding that they require. The NDIS represents a transformation in how our society provides support to the significant proportion of our community living with a disability.
The NDIS is heralded as a crucial step to bettering the lives of those living with disability moving into the future. The Australian Government has identified the economic disadvantages people with disabilities endure and have decisively chosen to bridge the inequality gap.
In the interim, the NDIS will run for 20 years with the option to extend the initiative beyond the initial 20-year period. And, in light of contemporary views on equality, this progressive framework which shows compassion towards individuals with a disability, wouldn’t make sense to be withdrawn.
What is SDA?
SDA (Specialist Disability Accommodation) is a vital component of the NDIS (National Disability Insurance Scheme). It is an initiative designed to provide a portion of NDIS funding to build new, accessible, inclusively designed, affordable housing for all Australians living with a disability.
Investing in NDIS property
Currently, there is a supply shortage of accommodation suitable for people living with a disability in Australia. The lack is particularly true for young people. The Australian Government has thought it necessary to involve private investors to speed up the rate at which supply can meet demand.
It is anticipated that the SDA funding will equate to approximately $700 million per annum.
With the increase in available housing stock the SDA is expected to provide, it will be easier for eligible individuals to access suitable accommodation.
All approved properties that are developed to provide housing for those in need of specialised accommodation, will benefit from the federal Government covering NDIS recipients’ rental costs for 20 years.
In addition, investors are provided with rental yields above 10%. This commitment from the Government is designed to boost investor confidence with greater security by ensuring a rental income higher than a traditional residential rental return.
How Does an Investment in NDIS Property Work?
Approved properties need first to be enrolled and compliant according to the SDA guidelines, and the owner of the property needs to be a registered SDA provider. Once approved, a property can then be made available to NDIS participants.
Once registered, the National Disability Insurance Scheme will connect investors and developers with NDIS participants. SDA housing providers are not directly funded by the NDIS, rather individual beneficiaries issued with a fixed accommodation budget to negotiate leasing arrangements with housing providers.
Investors also have the option to accommodate non NDIS participants in the same property as a NDIS participant, with rents to be negotiated independently.
Payments made via the SDA initiative are proportionate to the property's size, location, and specifics relating to accessibility the property provides. Payments are intended to cover construction plus a return on investment in excess of 10% per annum.
Finding Tenants
SDA Management Australia (SDAMA) is an organisation that specialises in SDA property management. SDAMA works with investors/service providers and assists NDIS candidates to find and apply for accommodation suitable for their requirements.
Investors can begin this process as soon as they have been registered with SDA and upon commencement of construction. This way, a suitable tenant can be ready to move in upon completion.
Various other platforms exist to provide property owners with the ability to find tenants. Additionally, there is the option for SDA approved properties to be made available in other markets.
The Housing Hub and NEST are two websites that are funded by the Australian Government’s Sector Development Fund. Here people with a disability can be matched with SDA housing that meets their requirements, and investors looking for tenants can list an approved property.
SDA Homes Are Typical Homes with Added Benefit
All SDA homes appear like typical dwellings from the exterior. However, the interiors have been specially modified to cater for the unique needs of individuals living with a disability, allowing them to lead a life with maximum independence.
For many young people, this may facilitate the ability to live in an environment with other people of similar age and not be forced to live in aged care while still receiving the specialised care and support they require.
Another important point is that SDA homes are newly constructed homes and built within typical owner-occupier developments. So, for example, a new estate with 50 brand new homes may include 1-2 SDA homes.
Therefore, SDA homes are located within regular new estates and do not feature within a group of SDA only homes.
Flexibility
A standard tenancy agreement is set in place, which typically lasts 24 months, with the option to extend after each agreement expiration without cost to the investor.
The investor or landlord also has the flexibility at the conclusion of a 24-month agreement to opt-out of the NDIS program and either sell their investment property or rent it out to a non-NDIS recipient without penalty. However, with higher yields than the traditional real estate sector, investors are incentivised to continue rolling over their lease on an infinitum basis.
What Makes SDA Property Investment Appealing?
The federal government fully backs the SDA initiative. It offers investors long-term, stable income with higher yields than the traditional domestic market.
- Rental yields in excess of 10% p/a
- Rental security
- Properties are built in high growth areas where there is an existing need
- Rentals are not guaranteed, and similar to the traditional market, rental returns are based on occupancy rates. However, data suggests that most NDIS tenants want to remain in their allocated accommodation long-term or even for life. Unlike other tenants, relocating for work or otherwise are significantly reduced and is why SDA homes are touted as forever homes.
Income Breakdown
Investors can expect remuneration in 3 payments
1. The reasonable rent contribution (this is based on 25% of the recipients DSP (Disability Support Pension).
2. Specialist Disability Accommodation (SDA) payment.
3. Commonwealth rent assistance.
Rental incomes for the investor vary from $1,615 p/week ($84,000 p/annum). Income is based on location, the number of tenants, and the type of accommodation. Typically, an SDA property is 3-4 bedrooms which can house 2-3 disabled people and their care provider.
Conclusion
SDA funding has been designed to make it attractive and viable for investors to invest in accommodation for NDIS participants.
However, just like a traditional residential property, the provider is responsible for ensuring the property has tenants. It is not the responsibility of the SDA or NDIS.
Queensland Investment Consulting Group can help you become an NDIS property investor, allowing you to benefit from the high rental yields available to service providers and help improve the lives of Australians living with a disability.
QICG can help you source sites and construct homes in high demand and meet all SDA requirements.
We can guide you through the entire process of registration, construction and finding and securing a suitable tenant before completion and property acquisition.
For more information relating to NDIS property investment, email us at info@qicg.com.au or call our international hotline 1300 002 880
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