The significant difference between the availability and demand for housing has caused considerable rises in rental costs, including the NDIS specialist disability accommodation properties.
Before investing in NDIS property, it is essential to research this type of investment. The research will help determine if this investment is for you and whether you can achieve your desired income. It will help you make smarter decisions.
NDIS Investment Opportunity
Before the introduction of NDIS, financial support for housing individuals with disabilities mostly came from the government's one-off capital grants or charities. With the introduction of the NDIS and Specialist Disability Accommodation (SDA) component, the government created a vehicle for financing SDA constructions and increasing investors' interest in the SDA housing projects.
As of September 2022, 534,655 participants are enrolled in the National Disability Insurance (NDIS), and 20,920 of these people meet the criteria for Specialist Disability Accommodation (SDA) funding. The essential criteria to access SDA funding is that participants should have an extreme functional impairment or very high support needs.
Data from September 2022 NDIS Quarterly report states that 3,419 participants in an SDA dwelling are seeking an alternative residence, and an additional 1,559 participants who were not in an SDA dwelling are seeking a vacancy.
Australia still needs to meet a great demand from 20,920 participants eligible for SDA, considering only 7,334 SDA dwellings have been enrolled so far. On top of it, with the latest NDIA forecast for over 1 million NDIS participants enrolled in the scheme by 30th June 2032, the demand for SDA will only grow.
The federal government has committed to stimulating private investment in the SDA sector by providing rental income through participants' SDA funds to investors. Currently, these funds are at $306 million and are yet to increase and fulfil the NDIA's $700 million in SDA funding initial projection.
By investing in SDA properties, investors can receive steady income and make a tremendous social impact by bringing more fit-for-purpose housing to Australians with disabilities. NDIS participants need SDA housing to improve their living standards and move away from residing in unsuitable places like nursing homes, hospitals and non-accessible homes.
What is the purpose of the government SDA initiative?
The Specialist Disability Accommodation (SDA) initiative is a highly ambitious program that needs $5 billion to construct SDA dwellings and meet the demand from participants. Since the government alone cannot accomplish this, they proposed an annual budget of $700 million through the SDA component of the NDIS to form an investor and user-driven market.
SDA funding is essentially an assistance package that provides participants with yearly finances. This package covers accommodation expenses (or rent) and care services participants need to live independently. The SDA funding applies to a dwelling for a period of 20 years, after which the property will return to the traditional real estate market.
Some tips for your NDIS/SDA investment
Here is the list of things for you to consider when looking into investing in Specialist Disability Accommodation.
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Location:
Choose a location close to public transportation and necessary facilities like hospitals, shopping centres and entertainment.
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Housing options:
Examine the demand and supply for various SDA housing designs. Select the SDA design that is not oversupplied in the area to ensure a low or no vacancy rate for your investment property. Seek advice on how you can future-proof your investment property for it to stand the test of time and competition.
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Choosing the right SDA Provider:
The SDA provider's role is crucial to the success of your SDA investment. Through their networks, SDA provider finds participants (or tenants) for SDA properties and manages the property. Select a reputable and well-established SDA provider.
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Choose your lender:
Find a lender who supports NDIS investment, as regular banks do not fund SDA properties (at least for now).
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Insurance:
Consider insuring your SDA investment property. The important detail here is that SDA property does not fall under home insurance, it is commercial insurance.
If you are considering investing in NDIS property and need further information, please get in touch with us; we can help you navigate the complex niche market of NDIS property.
Over time we have formed extensive links to the industry players and will be happy for our investors to leverage these connections. We will provide insights from the investor's and participants' perspectives to ensure every step of your NDIS property investment is done right.