What is the NDIS?
The National Disability Insurance Scheme (NDIS) is a government initiative formed in 2013 to fund costs associated with disability in Australia. This federal government funding helps to improve the quality of life for participants with disability, their families and carers. One of the most meaningful ways the NDIS supports the lives of those affected by disability is through providing specialist accommodation via funding.
How does the NDIS fund accommodation?
Specialist Disability Accommodation (SDA) was established in 2016 after a shortfall of suitable accommodation for those with disabilities was uncovered. Its purpose is to provide funding under the national disability insurance scheme for custom homes specifically built to meet the needs of Australians with disability.
Many people with disabilities are living in aged care facilities simply due to the lack of appropriate housing. Specialist disability accommodation funding aims to bridge the gap for specialist houses — turning a specialised residential dwelling into a long term home for a person with disability.
The Government has sought to remedy the high demand and low supply for specialist disability accommodation by providing incentives to you, the investor!
There are currently tens of thousands of people with disability within our community eagerly awaiting appropriate accommodation to become available. You have the opportunity to supply not only a property fit for their needs but also enjoy the fantastic investment benefits available through NDIS property investment.
What are the benefits of NDIS investing?
Through NDIS property investment, the Government is committed to providing a solution to the undersupply of specialist accommodation for Australians with disability. This generous funding allows Australians approved for the NDIS property to become your tenants — bringing with them a wealth of benefits for your NDIS investment
- The drastic undersupply of housing means you’ll never need to worry about your house sitting vacant. There are currently three levels of participants in the SDA program
- Having qualified participants as your tenants in your NDIS investment property comes with a multitude of additional benefits over having tenants who the Australian government doesn’t fund.
- Investing in Special Disability Accommodation Property means you get risk-mitigated NDIS investment properties that are government-backed.
- The NDIS property investment will let you receive above-market rates, realising incredibly high yields of up to 16%.
- Your rental income is pegged alongside CPI, so your income stream from your NDIS housing investment will rise with inflation.
Are there any challenges with NDIS Investment?
True to any form of investment, there are some aspects of NDIS property investment to remain cautious of. Bear in mind, the advantages of this incredible NDIS housing investment opportunity can far surpass the challenges.
- Limited market
The number of lenders willing to provide finance for NDIS property is low.
- Lower loan to value ratio (LVR)
It is not possible to get lenders' mortgage insurance on an SDA property. As a result, lenders will only offer up to 80% of the value of the property.
- Lower property valuation
The NDIS investment properties, as custom-made homes, are often valued lower than the contract price simply because there are no comparable sales in the area. The LVR is based on the value of the home, not the cost, which means that the mortgage may cover a lot less than 80% of the cost.
- Incorrect assessment of rental income
When determining your capacity to repay the loan, the lender uses the market-value rent, which is a lot lower than the actual amount received. The cash flow you receive from your NDIS investment property will be much higher than the market rate, but at this stage, the lenders don’t have a method of assessing this factor.
Your mortgage application could be rejected purely because lenders haven’t updated their lending criteria to consider the NDIS investing initiative.
The amount you can borrow is less than for a traditional home, the property valuation is less than the actual price, and the assessment of rental income is less than what you would actually receive.
For these reasons, any applicants must have a lot of equity in other properties or a substantial deposit to cover these valuation issues.
The benefits for investors and people with disability are low-risk and unrivalled. If you have the assets behind you to overcome these lending barriers, investing in NDIS property could be the investment opportunity of a lifetime.
- Limited market