NDIS (National Disability Insurance Scheme) property investment is a relatively recent addition to the range of options for property investors in Australia, but it’s one that’s well worth considering.
What is NDIS property investment?
NDIS property investment involves buying or building residential accommodation for NDIS recipients who have the highest care needs. This accommodation is called specialist disability accommodation (SDA) and there are four broad types to cater for different tenant needs:
1) Improved Liveability. This design category is for people who have sensory, cognitive or intellectual disabilities.
2) Robust. This category of accommodation has highly resilient features for the safety of tenants and their carers.
3) Fully Accessible. This SDA is designed for tenants with physical impairments.
4) High Physical Support. This category is designed for tenants with the highest level of physical impairments. It includes features such as ceiling hoists and voice control technology.
Each type of SDA must meet specific design standards and include a range of features to enhance the lives of tenants and their carers.
What are the benefits of NDIS (SDA) property investment?
NDIS (SDA) property investment can provide you with all of the standard benefits that any type of residential or commercial property investment can provide:
- The potential for capital growth as the property increases in value over time. Australian property prices have a long-term history of growth.
- Regular tenant income that you can use to help you with your property loan repayments.
- The ability to reduce the amount of tax you pay by claiming investment property tax deductions (like loan interest, loan fees, council rates, and property repairs and maintenance).
In addition, NDIS (SDA) property investment offers the following additional benefits:
- The potential for higher capital growth due to the shortage of NDIS properties in many areas across Australia.
- Government-guaranteed, long-term income when you find a tenant (as the SDA is funded by the tenant’s NDIS package).
- The potential for higher rental income (double-digit yields on SDA is common due to the high demand and government funding).
- The opportunity to improve the quality of an SDA tenant’s life. This is a non-financial benefit but one that can make you feel like you are making a positive difference in the community. It’s an ethical and social benefit of NDIS property investment that many other types of investment can’t provide.
Where is the NDIS (SDA) property demand?
As with any type of property investment, it’s important to build or buy SDA in areas where there is high demand. The NDIS publishes the latest SDA demand data on its website. The data is highly detailed and shows demand for each of the four categories of SDA across Australia.
Some areas have higher demand than others, so it makes sense to prioritise buying or building in these areas to maximise your ROI.
A La Trobe University study found that:
- The estimated supply of SDA needs to increase by 60% across Australia to cater for the expected number of NDIS-funded SDA participants (28,000), and
- The majority (two-thirds) of eligible SDA recipients are aged under 45.
Unfortunately, the current shortage of SDA means that many eligible SDA recipients are forced to live prematurely in aged care accommodation instead. Many others are forced to live in homes that don’t have all the facilities and features (like ramps and stair lifts) to cater for their high care needs.
Other NDIS SDA FAQs
Who funds the NDIS?
The NDIS is funded by the federal government. Significantly, it is a scheme that has bipartisan support. This means that the NDIS will remain in place regardless of which political party is in power. This support means that SDA property investors have security for their government-guaranteed tenant income.
Can you decide what type of SDA you build?
Yes, you can build in any of the four SDA categories, but the dwelling must be approved by an independent SDA assessor before it is eligible for tenants.
It’s best to get expert advice about the most appropriate type of SDA to build for your budget, as well as where to build given current and forecasted future demand. It’s possible to build and have your SDA tenant (or tenants) in place as soon as your building is approved if you use an end-to-end NDIS property investment service.
NDIS (SDA) property investment is a growing area, and it’s an opportunity that may provide you with both financial and non-financial benefits. For more information on financing an NDIS investment property, please get in touch with us today.