NDIS Investment Loans

Feb 21, 2022Home Loan Hints

Australian Broker Feb 2022

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 disability, their families and 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 came into being 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 with a disability the government has identified the 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 suitable 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 be providing over $700 million on an annual basis.

Given the significantly higher rental yields, this will provide investors with the confidence required to make a considerable investment into the scheme, therefore generating a crucial uplift in the amount 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 as well as making it easier for support to be safely delivered as well as more efficiently. The purpose of SDA is to improve, maintain or prevent ones functional capacity from getting worse, to reduce their future support needs and to create better connections with their family, community, health services, education as well as 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.

Talk to us about investing in NDIS housing today.

What are the 4 Specialist Disability Accommodation design categories?

The NDIS will look at four categories of accommodation when deciding whether to fund the property or not. They are:

1. Improved liveability: In short this means accommodation with improved physical access. It also includes design features that assist with cognitive impairments as well as sensory and intellectual impairments. For example a ramp rather than stairs to enter the property and brightly painted walls or allowing the tenant to see easily.
2. Robust: Put simply, this refers to property that is purpose built to keep tenants and others safe within the home as their impairment may result in them causing damage to the property, so the property needs to be robust.
3. Fully accessible: This design relates to people who suffer with severe physical impairments, so the property needs to be built to allow access with the use of devices such as lifts or ramps.
4. High Physical Support: Again, like fully accessible these properties need to be designed to allow for ceiling hoists, backup power supplies or technology that allows for home automation and communication technology. (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 who is familiar with the needs of the participants.
 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 the ability to take part 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 will develop and utilise a variety of 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 very large providers of SDA may pool a portion of their SDA payments to fund a vacancy management team for their SDA portfolio. These teams may operate in a way like more centralised approaches delivered by state and territory governments under previous systems. Some SDA providers may choose to engage a third party to manage their vacancies and tenancies, as is most often the case in the mainstream housing market.

The funding is supported by the Federal Government and provides a guaranteed and secure income stream to the investor.

What properties can be built for NDIS?

The properties you can construct under the NDIS scheme are apartments, villas, duplexes or townhouses, stand-alone houses and group homes.

 In a residential building, apartments are separate units that are self-contained.
 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 common roofs, walls, entrance areas, driveways, parking lot, etc.
 If there are four or five participants, group homes are ideal.
 As long as there are a large number of residents living in it, any of the above can be considered a group home.

What are the design restraints?

The properties design restraints must align with the following:

 The property should be a permanent dwelling and not a mobile home.
 One participant should be definitely 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 National Disability Insurance Agency (NDIA).
 Should meet the requirements of new build, existing stock or legacy stock set out in SDA rules and NDIS and price guide.
 All buildings and dwellings should have all of the following elements:

+ Kitchen
+ Bathroom
+ Living/dining area
+ Entrance/exit
+ Bedroom

by AJ Kavanagh
25 February 2022

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