Specialist Disability Accommodation (SDA) FAQs

Legacy Stock – Houses more than 5 Participants and it has been used before Dec 2016 to house people with a disability and it largely complies with one of the SDA categories.

Existing Stock - Houses up to 5 Participants and it has been used before Dec 2016 to house people with a disability and it largely complies with one of the SDA categories.

New Build – Received a certificate of occupancy after April 2016, houses 5 or fewer Participants and it fully complies with one of the SDA categories.

Basic Category – Is without specialist design features but is currently housing people with SDA in their plan. This category only applies to Existing and Legacy stock.

Improved Liveability Category – Incorporates a reasonable level of physical access and enhanced provision for people with sensory, intellectual, or cognitive impairment.

Fully Accessible Category – Incorporates a high level of physical access provision for people with significant physical impairment.

High Physical Support Category - Incorporates a high level of physical access provision for people with significant physical impairment and requires very high levels of support.

Robust Category – Incorporates a high level of physical access provision and is very resilient, while reducing the likelihood of reactive maintenance and reducing the risk to the participants , Support Workers and the community.

Multi category – This category is for stock that is to be certified under more than 1 category. Logically, this is most likely Robust and one of the physical disability categories.

Normally a home is built to high physical support compliance is down compatible for fully accessible, and improved livability provided attention has been given to the specific compliances required for each of these categories. As an example in improved livability there must be a 65% contrast of colour between the walls and door frames to allow for visually impaired persons to identify where doorways which usually means the architraves around the door frame are a much darker colour than the walls.

First of all, consider why SDA exists:

SDA Specialist disability accommodation was born from the premise of a human rights issue that safe housing should be a right to everybody. Also: 

• To reduce the number in Hospitals … can be $1 million per year to maintain 

• To help  transition  young people out of aged care  There are mental health issues here with 18 yr Olds mixing with 80 yr olds 

• To help elderly parents from the concerns they have regarding their adult “child’s” future once they are unable to provide the care  that they probably do now do at home or they have concerns about their own longevity and the future of their loved one after that! 

• SDA helps to reduce the number of people with cognitive disabilities whose behaviours can be monitored and assist in providing a much better home and living experience and also a much safer environment for themselves and the community . 

• Helps to bring a much better quality of life to the homeless who are eligible 

Now, given that government policy is to integrate people with disabilities into the community, consider the billions of dollars that charities and/or the State and Federal governments would need to find in order to provide the right type of dwellings to suit all disabilities, in the right location? Apartments, villas, houses keeping the dwelling numbers in all  housing to no more than 4 people all across Australia. Not only do the properties need to be built in the first place, but then they need to be managed, maintained, replaced, etc.  The government would never be able to achieve this without help from private investors.

SDA is a solution which allows people with disability to live in environment that is more could conducive to enable their capacities to be enhanced in a stable and safe environment which ultimately leads to scenarios where people are not focusing on the disability and as a result can find themselves in employment enhancing skills and building on current skills they have and as a result the Medicare system is not as strained because many people are not leaning on it as much as they had in the past when they weren’t living in an environment that was purpose-built to suit their needs.

According to the NDIA:

2022 - 22,873

2027 - 27,022

2032 - 29,742

2037 - 32,976

2042 - 36, 684

SDA funding under the NDIS is a legislated commitment of Australia's Commonwealth, State and Territory governments, set out in the NDIS SDA Rules (2016) under the NDIS Act (2013).

That’s the official answer, however, let’s look at it from a practical viewpoint. What’s the alternative? Putting people with disabilities back into hospitals, prisons, institutions, retirement villages? Imagine any government going to an election with that as a policy? 

SDA is there for eligible people who need support to go about their daily lives effectively, those that are the most in need and with the fewest alternatives; it is there for only around 30,000 of the approximately 650,000 Australians that receive NDIS support. Even if it wasn’t legislated, which would require all states and territories as well as the Federal Government to agree to (much like GST legislation), this is not where you would start.

Apartments – 1, 2 Participants

Villas – 1,2 and 3 Participants

Houses – 2 and 3 Participants

Group Houses – 4 and 5 Participants

Then they can be further differentiated by whether they were built before or post the inception of the NDIS and also by their disability categories, for example, you could have a 2-bedroom villa (plus a room for the carer), that is Existing (pre-NDIS) and Improved Liveability (it meets most of the requirements for this category).

For more detail, refer to the FAQ: What do all these terms mean?

Dwellings that were built before the NDIS and have been absorbed into the system can house from 1 - 6+ Participants.

Dwellings that have been built as a part of the NDIS can have a maximum of 5 Participants.

The rent is determined by a number of factors:

• When was the dwelling built?

• What type of dwelling and number of Participants?

• What design (disability) category?

• Is there are separate room for a carer (OOA)?

• Are there fire sprinklers

• Was the GST claimed?

• What is the location of the dwelling?

• Are there non-SDA people sharing the dwelling?

• Are there two SDA Participants sharing a room?

Fortunately, the NDIA has provided an SDA Price Calculator that is regularly updated to help determine the amount of rent.

The vast majority of the rent is paid by the NDIA, however there is a “Maximum Reasonable Rent Contribution” that is paid by the Participant. Note that this amount is a maximum, not a compulsory amount.

No! The best way to think of it is that the payment lives with the Participant, not the dwelling. Within the Participant’s support package will be an amount for the SDA dwelling, so if you don’t have a Participant, you will not receive any rent.

This fact alone should make investors want to undertake proper research before they invest in an SDA property.

The SIL’s (Supported Independent Living) are the carers. The SDA is the house. The SIL’s can operate from an SDA house, a standard house rented from a real-estate agent, a family home etc.

SIL accommodation is a shorthand term for a house, typically rented out by the SIL, that houses a number of NDIS Participants who do not qualify for SDA dwellings. 

This enables the SIL’s to provide care in one location to a  number of their Participants.

Simply, no SIL, no Participants, and no rental income. A Participant can not move into an SDA dwelling without an appropriate level of care by a SIL.

Under the rules set by the NDIA, SDA is only for adults (with few exceptions), so the minimum age is 18.

The upper limit is 65. If the Participant was receiving supports through the NDIS prior to their 65th birthday, then they will continue to receive support through the NDIS. In other words, if a Participant is in an SDA, they will not stop receiving their support after their 65th birthday.

The most common mistake that many investors make is to not look at this through the eyes of the Participant and instead focus on maximising returns. This often leads to disappointment when the investment fails to reach its potential.

Specifically:

• Not undertaking any research to determine if the area has a lack of supply of SDA dwellings.

• Choosing a block that is not suitable for an SDA dwelling.

• Choosing the wrong type of dwelling for the specific disability category.

• Trying to maximise returns by building a dwelling that only reaches minimum standard.

• Building a dwelling for too many Participants.

• Not allowing for other SDA specific costs that fall outside of finance and land acquisition

• Not allowing for any construction delays. 

• Not allowing for the time between when the building is completed and when the house is registered with the NDIA, and Participants can move in.

• Not allowing for the time it takes to source Participants that are compatible and ready to move into the dwelling.

SDA Data primarily provides the following services: -

Education

SDA Data was originally conceived as a knowledge hub bringing together expert commentary and insights relating to Specialist Disability Accommodation. Our contributors are all experts in their field and showcase their knowledge in the blogs and other media on sdahelp.org. We believe an informed participant and and informed SDA landlord makes for a equal partnership.

Consultancy

It is our job to ensure that you thoroughly understand what investing in SDA is all about – warts and all. The SDA investment process is slow and somewhat bureaucratic, but if you know what is coming, then there should be no surprises.

It is the job or our experts to provide you with the best advice and guide you to the locations that fit within your budget  as well as where there is the greatest shortage of SDA dwellings. 

Introductions

To make this work, we need to introduce you to a number of experts within their respective fields; SDA finance brokers, experienced SDA builders and SDA Housing Providers. All of these resources are managed on your behalf by our in-house SDA Consultant who has travelled the highs and low of SDA for man years.

Support and Guidance

Apart from helping you source the right block of land (not as simple as it sounds), within the right location, we provide all of the necessary support from start to finish. We maintain communication with all of your SDA team, report back to you on progress and deal with any issues that may arise. As the name suggests, SDA Data is here to help.

Data reports

SDA Data provided industry leading reports that quickly determine if a location for an SDA home (broken down into supply and demand by participant type, SDA design category and many other important metrics. Our reports can be purchased here

There is a significant amount of publicly available data, however SDA Data is able to convert that data into information to enable not only a comparison between different areas, but also over time. This forms the foundation behind any investment recommendation.

The next step is to verify that information with “boots on the ground”  knowledge by interviewing one or more SDA Providers that are responsible for finding you the Participants.

Only if the SDA Provider can provide support to the data provided by SDA Data should the location be considered.

This is a very big subject in the industry. Lenders are now clamping down on WHERE the home is located and the PROFILE of the investor. They too want certainty of occupancy and generally insist on our reports accompanying the loan application. Our advise is get the report before you commit so you know you wont be wasting your time right to the end of the application.

If you have had good consultancy on the location and design of the dwelling  and have appointed the correct SDA Provider then you shouldn't have a problem. Never buy from a marketer that is merely flicking some developers product. They are not incentivised to ensure you get a tenant. In their mind "it's the SDA Providers problem!". It's too late to review the data once you have a contract to purchase and no lender will settle for you.

Yes you can but there are conditions related to the selling the property.

Yes. There is no difference in investing in an SDA property than there is in any other investment property.

Critically important!  Most SDA providers unfortunately have been real estate agents or property people who have jumped into this space thinking it is a rent roll and is not the primary mandate of the NDIS for an SDA Provider. 

Yes, for two reasons which protect the participant as the SDA provider then sub lets to each participant

Typically 1 to 2 years at first then renewals occur for longer terms after that! Participants typically do not move around from house to house

Refer to blog

Yes, and this may vary depending upon the location, property type and SDA classification.

The answer is "it depends". Please read blogs or watch webinar.

It is now a requirement by the NDIA to provide a Preliminary Certification prior to the commencement of construction. 

Once the building is completed the certifier will check the dwelling to ensure that the builder has complied with the design and inclusions as per the Preliminary Certificate.

If the dwelling complies, then the Certifier will provide the certificate which will then be provided to the SDA Provider whose responsibility it is to have the dwelling registered with the NDIA.

To ensure that the dwelling is certified, it is highly recommended that this requirement  is stipulated within the building contract.

This is not compulsory; however, it is often requested by the SDA Provider.

The person who caused the damage.

YES ! There are only a couple of companies who provide this as It has to be commercial due to  a business of care going on inside and is usually around the $3000 mark.

NO

The tenant and the SIL Provider and the SDA monitors the property for maintenance requirements

Yes. Some investors prefer to acquire an already built SDA as a way to remove uncertainty around build risks, tenant placement and the need for one contract if investing via your SMSF. It's obvious, however, that the yield on a built and tenanted SDA will be lower with much of the risk removed. Some of our partners build SDA to sell with a tenant already in place but we still assess the home for future tenancy prospects so you don't pay a premium for the temporary relief on certain risks.

This depends on a number of factors including where the property is located (and what the location factor is for this area), how many participants in the home and whether or not you have sprinklers included. You can expect between $140,000 and $200,000 gross per annum for a two participant home. 

The SDA provider will ensure you receive your monthly 'rent' payments in three parts for each tenant (NIDS participant):

1. The fair rent contribution paid fortnightly by the tenant.
2. 100% of the participant’s Commonwealth Rent Assistance.
3. NDIS SDA Payment which is paid quarterly in arrears.

The owner will have an agreement with the SDA provider (the "property manager"). The SDA provider then has an agreement with the NDIS participants (tenant)

SDA Help only recommend investment packages that not only tick all the boxes relating to location data (both NDIS data and our own proprietary data) but also where our recommended SDA providers and their carer network have provided us with a comfort letter that they have sufficient demand from participants waiting to fill the new SDA home. Similarly, they will let us know what supply is in the pipeline so that yoy are first to access the available participants in the area.

generally it's not a good idea from an economic standpoint. According to the NDIS, they expect you to spend as much as $600k on a renovation which is not recommended. Also SDA Providers prefer brand new purpose designed and compliant homes and they are ultimately responsible for finding you a tenant.

One of the various criteria we consider before recommending an SDA Provider in our network is vacancy rate. Currently they sit at zero vacancies. There are a number of factors that contribute to this and I encourage you to know that they are so you can validate when someone says their vacancy rate is zero.

Hybrid SDA house can be used for all of the four categories, including Robust (RO), Improved Liveability (IL), Fully Accessible (FA) and High Physical Support (HPS). It's essentially a design that allows for all category of participant to live there. For example, an FA house design cannot accommodate a participant with robust needs but a hybrid design can.

A Hybrid SDA house design can cater to multiple categories: Improved Liveability (IL), Fully Accessible (FA), and High Physical Support (HPS). This design provides flexibility for SIL providers, allowing participants with degenerative conditions to stay in the same home as their needs progress. However, including Robust SDA in a hybrid design is not advisable. A house designed for HPS, FA, and IL that also includes Robust provisions will only ever accommodate one participant at a time, defeating the purpose of a hybrid design.

Click the link to the official rental income calculator. The SDA price calculator can help you calculate the expected annual income of an SDA dwelling and depends on the participants level of needs, the location and the type of property.

The cost varies across Australia but also depends on the class of building (class 1 or class 2) and the water pressure to the house.

3-4 weeks depending on the SDA provider

The agreement the owner has with the SDA provider is can be 5 years whereas individual tenant leases with the SDA provider can be 12-24 months

There are a number of exit strategies: renovate (retro fit) back to a standard residential property, resell the property on the open market, sell to an NDIS investor that has participants, sell to a SIL provider (they have participants that do not qualify for SDA but still need a SIL managed home). It's important to select a location where the ratio of demand to supply for participants are high but also where the ratio of demand to supply for standard property is high so you benefit from organic capital growth prior to selling. As a reminder, one of our experts and founders built Australia's first suburb capital growth assessment tool that rank orders 15,000 suburbs based on their ratio of demand to supply. We bring this expertise into our location analysis.

SDA housing is funded through a combination of NDIS SDA payments and participant contributions.

o receive SDA funding, individuals must be assessed as eligible for SDA in their NDIS plan and choose to allocate funding towards SDA. To apply for SDA funding through the NDIS, a support coordinator along with allied health professionals (AHPs) must conduct an assessment and develop a housing plan. If you lack the funding to support this application process, you will need to initiate a plan review request.

SIL funding covers the costs associated with providing support services to individuals living in SDA housing. It's intended to help them live as independently as possible.

The NDIS/SDA funding and framework are anticipated to continue for 20 years, after which properties may revert to the general market. SDA funding under the NDIS represents a legislated commitment by Australia’s Commonwealth, State, and Territory governments, as detailed in the NDIS SDA Rules (2-18) of the NDIS Act 2013.

This legislative framework underpins the government's steadfast, long-term commitment to providing SDA funding within the NDIS framework. Beyond fulfilling this legislative mandate, SDA funding assists eligible participants in achieving improved living outcomes, while also offering a cost-effective solution for the NDIS. This efficiency not only saves government and taxpayer money but also alleviates the financial burden of directly accommodating individuals with disabilities.

There are several options available based on each investor's individual circumstances. Investors can finance a Specialist Disability Accommodation (SDA) property through various methods tailored to the unique aspects of SDA investments. One option is obtaining specific loan products which usually require a 20% deposit and offer Loan to Value Ratios (LVRs) between 60-70%. Another method is using a Self-Managed Super Fund (SMSF) to invest, benefiting from tax advantages and stable income. SMSFs can engage in Limited Recourse Borrowing with LVRs typically between 60-80%. Direct investment is another approach for those with sufficient capital, offering complete control and potentially higher returns. This involves purchasing land and ensuring compliance with SDA construction standards. Alternatively, co-investment schemes or property syndicates allow multiple investors to pool resources to purchase SDA properties, reducing individual capital requirements and spreading risk.

We recommend consulting with our SDA Help finance specialists, as this type of asset requires specific lending solutions that traditional banks may not fully accommodate. Additionally, we can explore leveraging existing home equity or utilising superannuation funds depending on your preferred approach.

Similar to other investment properties in Australia, SDA properties can be negatively geared, allowing investors to claim tax deductions on expenses such as loan interest, maintenance, and depreciation. Appropriately bought SDA property should be positively geared, however, in circumstances when rents fall short of all costs then negative gearing becomes relevant.

You can definitely purchase an SDA/NDIS property through an SMSF. The condition is that the SMSF must buy the SDA/NDIS property under a single contract. You either buy the SDA home under one contract prior to construction or acquire a completed SDA property.

The Reasonable Rent Contribution (RRC) in the NDIS refers to the amount that participants are expected to contribute towards their Specialist Disability Accommodation (SDA) costs. This amount is typically set at 25% of the participant's Disability Support Pension (DSP), plus any Commonwealth Rent Assistance (CRA) they receive. This contribution is meant to ensure that participants have an affordable living arrangement while also providing a consistent and predictable income for SDA providers.

SDA properties require a specialised valuation that considers the higher rental returns and specific compliance requirements, unlike standard residential valuations. Given the higher rents associated with SDA properties, valuations can often be higher than a comparable standard rental property in the same location. This presents numerous funding opportunities with regards to extracting equity for further acquisition of SDA properties.

Specialised SDA property valuations are more detailed than standard residential valuations. A standard valuation assesses the property based on standard residential rental properties, leading to undervaluation. For instance, if an SDA home costs $900,000 and you have a 20% deposit ($180,000), you need to borrow $720,000. If the valuation comes in at $775,000, the Loan-to-Value Ratio (LVR) would be 93%, which is not typically approved. To avoid this, either a larger deposit or a valuation closer to the property's price, as provided by an SDA valuation, is necessary.

90% with Lenders Mortgage Insurance (LMI).