Asked Questions

When it comes to NDIS investment properties, every question matters and deserves a thoughtful response. So, don’t hesitate to ask! Below, we’ve addressed some of the most common queries that come up during our consultations.

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Frequently Asked Questions

National Disability Insurance Scheme (NDIS) Questions

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.

The legislative framework for providing SDA to participants under the NDIS, including the criteria for when a participant will have SDA included in their NDIS plan, the dwellings that can be used for SDA and the payments that will be paid to providers of SDA are set out in:

(i) the National Disability Insurance Scheme Act 2013 (the NDIS Act) and the NDIS Rules under the Act, including the NDIS (Specialist Disability Accommodation) Rules 2020 (SDA Rules) and the NDIS (Specialist Disability Accommodation Conditions) Rule 2018 (SDA NDIS Q&SC Rule), which incorporate the NDIS (Specialist Disability Accommodation Conditions) Amendment Rules 2020;

(ii) this NDIS Pricing Arrangements for SDA; and
(iii) the general NDIS Pricing Arrangements and Price Limits.

2. This NDIS Pricing Arrangements for SDA is referred to as the SDA Price Guide in the SDA Rules and contains further detail regarding the Design Categories and Building Types described in the SDA Rules.

3. This NDIS Pricing Arrangements for SDA also sets out the price limits for particular SDA types and locations, including allowances for features.

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 taxpayers a lot of money otherwise spent on accommodating the Participants themselves.

What is the Shortage of Suitable Housing for NDIS Participants requiring SDA?

There is a huge shortage of suitable accommodation currently available for NDIS participants. A detailed study of the undersupply of NDIS housing in 2020 by The Summer Foundation noted, there were 17,500 existing SDA residents (pre-NDIS) however, only a minor number of these residents were in dedicated SDA homes. And with more than 28,000 SDA places required across Australia, the estimated undersupply of SDA places was over 7,700. Two years on, and this shortfall has undoubtedly increased.

Who qualifies for SDA
Funding and Accommodation?

The NDIS 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.
There are 4 levels of NDIS SDA homes each designed for a different level of disability and care:

  • Improved Livability
  • Fully Accessible
  • Robust
  • High Physical Support

How do I receive my payments from a SDA Investment Property?

The SDA payment from the NDIS is a standardised annual amount calculated based on the dwelling's location, size, and level of accessibility. This is on a per Participant basis. As for all NDIS support, Registered Providers can make a claim for SDA payment after that support has been delivered or provided. Standard claiming frequency for SDA is monthly, however, the frequency can be flexible as long as it is in arrears. Owners should be paid monthly in arrears from the SDA.

Each Participant’s payment is made up of 3 parts;

  • Reasonable Rent Contribution (RRC): (25% of base disability supplement)
  • 100% Commonwealth Rent Assistance
  • NDIS SDA Payment (Refer to the NDIS SDA
    Payments Schedule in this eBook)

What is RRC?

This is a Reasonable Rental Contribution (RRC) paid by the tenant, capped at 25% of the base rate of the Disability Support Pension and 100% of any Commonwealth Rental Assistance scheme. This is the same for the participant no matter where they live; it is approximately $10,911 p/a per Participant.

What is the NDIS?

The National Disability Insurance Scheme is a government initiative implemented to provide financial assistance to hundreds of thousands of Australians with a significant and permanent disability and their families and carers. The NDIS is designed to assist people with disabilities to live more independently.

What is a NDIS Participant?

A ‘Participant’ is a person with a disability who has been accepted into the National Disability Insurance Scheme and receives funding to purchase supports and services that will help them achieve their goals.

Why is there a Government initiative?

The SDA policy is an ambitious initiative requiring $5billion to build housing. Government cannot achieve this and thus launched the $700million 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 frame-work for New Builds will continue for 20 years, after which your property will revert to the Existing Build pricing.

Can the Govt cut or reduce the NDIS payments mid-way through the 20-year term?

There’s a bipartisan agreement that’s been signed off by all the parties in Canberra – the scheme has a 20 year timeframe of NDIS Certification. All the States and Territories also are unified in this program to ensure federal funding goes where it’s supposed to go.

What is a NDIS Provider?

A ‘provider’ is a person or business, registered with the NDIS to offer support and services to a Participant.

Can you have SDA without SIL?

The NDIS recognize most people who need SIL are able to live in an ordinary home that is already available and does not need modification. Most people who will have SIL approved as a reasonable and necessary support in their plan will not need SDA.

What is the difference between SDA & SIL?

Supported Independent Living (SIL) is funding for the support or supervision of daily tasks to live independently. Specialist Disability Accommodation (SDA) is the ‘bricks and mortar’ component - funding for housing for people with a disability who have severe functional impairment or highly complex support needs that require specialist housing alternatives.

What is SIL?

Supported Independent Living (SIL) is help or supervisionwith daily tasks to help a Participant live as independently aspossible, while building skills.

What is SDA?

Some Participants in the NDIS will receive funding for SDA.SDA stands for ‘Specialised Disability Accommodation’ and isa system created under the NDIS for people with high support housing needs to ensure they are able to live independently and also receive support they require whilst at home in specially designed or adapted homes to help deliver their support needs.

Investor Questions

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:

  • Architect
  • Builder Surveyors
  • Occupational Therapist
  • Access Consultan
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 certification 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 accommodate NDIS/SDA Participants and therefore will not receive the high returns.

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.

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.

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.

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.

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 door.

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.

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 6-10 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.

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.

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.

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.

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.

How does the NDIS help Property Investors?

The NDIS SDA funding scheme will provide accessible 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 Participants 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.

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. I.e., 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.

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 also collect the Reasonable Rent Contribution (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.

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.
  • NDIS property prices start from around $800,000 and can range up to $950,000, 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.

Property Management Questions

What happens after the first 12-24 months?

These new homes are very sought after as many disabled people are currently living in less desirable accommodation like nursing homes, hospitals or low standard living accommodation so are likely to stay for an extended period.

The lease is extended based on all Participants living happily together. It is up to the SIL to ensure all Participants are happy and if not, move Participants in or out to provide the best outcome for the Participant and the household.

What’s the estimated time to get Participants into my property?

Unlike a non SDA style home, there are various matters to be taken into account, when looking for and securing a NDIS- SDA approved Participant. Location of the property, suitability of the style of property in that area and, demand for that style of home with a suitable Participant are just some of the factors which will need to be addressed.

The process of looking for a Participant starts before the build has even started. We work closely with Service Providers, most of whom have Participants on file, but there can be many factors that can delay this process also, as they may not yet have SDA funding approval on their Care Plans, or they may need to move out of current accommodation which may take time to transition across.

Who is responsible for utilities?

The Participants are responsible to connect with utilities such as NBN, electricity and gas. However, it may be more efficient for the Owner to establish and maintain accounts with these providers in their own name and bill the ongoing costs back to the Participants, as it will be hard to get connections made to the home with 3 or 4 separate Participants.

Who is responsible for maintenance and the associated costs?

It is generally understood that Participants will look after their own maintenance of the home, but it is suggested that a Landlord look after lawn mowing and basic garden maintenance. The Landlord is responsible for all other normal maintenance as per any other investment property. The Participants would be responsible for damage caused to the property.

Can I as an investor lease out my property through a local Real Estate Agent?

No. A SDA home must be managed by a property manager that is registered SDA Service Provider under the NDIS. There are very strict practices that have to be adhered to when working with people in the disability sector and only an authorised SDA provider can manage your property.

The properties are leased directly to the Participant so that SIL and other Service Providers can continue their high-care services without the organisation worrying about leasing or property management requirements.

What happens if I lose a Participant?

Like all ongoing investment property ownership there is always the risk of losing a Participant. 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.

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’. NDIS homes are built to a very high standard. They do not present as a hostel or overcrowded old-style disability housing. These homes are built and designed to a high level to accommodate and last.

Does the SDA Provider have Participants lined up to move in?

Most likely, yes, but there are no guarantees. With careful planning and working with an efficient provider, and the vetting in advance of potential Participants, one would hope that the Participants will be ready to move in on completion of the new home. However, there is no guarantee this will happen on day one. There may be a short period of time between house completion and transition to bring the Participants into accommodation. This all depends on the area chosen and the number of Participants on the waiting list.

Who finds suitable Participants for each property?

A SDA Provider, once engaged, will be the 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 finance has been approved and prior to commencement of the build, with the intention of having the property occupied as soon as possible after the property is completed.

How does the lease agreement work?

With a non SDA Home you work with a Local Real Estate Agent to help find you a suitable tenant. You sign a Managing Agency Agreement with a Licensed Real Estate Agent. They will source a Participant and then sign a lease agreement with the Participant on your behalf. There are different methods of engaging with Participants with a SDA property. You could have an agreement directly with the Participant or you may have a SDA Provider maintaining a Head Lease which enables them to sublet the property to suitable SDA approved Participants (tenants).

Is the landlord responsible for furnishing the property?

It would be unlikely that a complete furniture package would be required, as most Participants would have their own furniture for their bedrooms, but we would suggest there might be some furniture required for the shared spaces. Each home would have different requirements, but we believe an allowance of $5,000 - $10,000 for items like a fridge, washing machine, table and chairs and lounge would be wise.

Can my property be converted back to a regular home?

Yes, if you wish your property can be easily used as a standard home.

Is there a bond payable by the Participant for a SDA Property?

This will depend on the individual State or Territory however we would be ensuring a bond is payable when letting a SDA property. The bond fee will be the equivalent to four weeks rent for each Participant per room (which is the Participant contribution amount only the NDIS payment is not factored for a bond calculation).

How does the lease agreement work with more than one Participant?

A separate lease agreement is signed with each Participant and these are usually for 1-2 years.

Finance Questions

Can I purchase a SDA property through a SMSF?

Yes, you can. The restriction will be if you intend to borrow money to buy land and construct a NDIS approved property. In this instance, you would purchase a property as a single contract purchase. If you are intending to use cash, you can fund the land purchase and construction using cash.

What about the resale of the property?

Aside from wider passageways, and doorways and other features, it is very easy to turn the dwelling into one that any family could comfortably live in.

How much can I borrow?

Borrowing to build a Specialist Disability House is generally limited between 60% to 80% as this is a niche segment that is still growing. Furthermore, you might be able to borrow more if you plan to invest in a property that requires more improvements according to the SDA Design Category.

In theory, you can borrow up to 80% of the total cost of land and construction.

We reiterate, in the word ‘theory’ because lenders are few and far between and it’s going to take time for most lenders to open up to this NDIS sector for residential lending.

What is the difference between a one-part and a two-part contract purchase?

Two-part contracts are very common when purchasing house and land packages. Buyers usually sign a contract with the land developer for the land component, and then a separate contract with the builder for the build component. Buyers are required to settle on the land portion, and then pay ‘progress payments’ during construction. Progress payments are made to the builder over the course of construction to fund the works (e.g.: materials and labour). At key milestones along the way (e.g.: slab, frame, lock-up), buyers will be required to make payments based on the pre-determined percentages of the build contract price.

One-part contracts are more common when purchasing apartments and townhouses. Buyers sign a single contract, covering both the land and building component. A deposit is paid upon contract signing, with the balance of the property price paid at settlement.

What happens after 20 years?

The investor can sell the property as per standard Real Estate legislation requirements. The investor also has the option to roll over their agreement and continue the NDIS as existing NDIS stock once the 20-year period is up.

What are the challenges of getting a home loan?

Since this is a niche area of finance for lenders to be in, investors are bound to face some challenges as a borrower:

The biggest challenge is banks generally do not lend for NDIS. Usually you would need to go through a non-bank lender, and even then it can be difficult to find a funder. Then, it is rare for them to offer construction lending for NDIS.

As the requirements for Specialist Disability Housing are quite specific, the cost of construction might exceed the final value as determined by an independent valuer.

Other challenges to getting a home loan:

  • The property is only made for a specific niche of people, so it might be harder to sell later on.
  • Lenders generally do not prefer long terms leases.
  • Since the property is specialised (i.e. a non NDIS participant/tenant would generally not live there), some lenders might not accept it as security.
  • There could be problems with valuations as the property might be valued as a non-SDA property and will not account for the special modifications made to it.
  • The construction has to be compliant; signed off by a SDA design certifier.
  • There could be vacancy rates if the Participant moves out, while waiting for a new tenant to come in.

How can I get a property investment loan from a lender?

This is a specialist residential asset and therefore is not fully understood by a lot of financial institutions. Some lenders have become lenient when it comes to lending money for SDA projects and property. Besides providing home loans for participants, lenders are encouraging investment loans for family, friends or any interested investor. Since there is a 20 year rental backing from the government for SDA property, lenders should be willing to lend to investors with a deposit of 20%, but we still recommend investors have the appropriate amount of cash available to consider this opportunity.

Get in touch with our team for more information now.

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