What is the NDIS?
The National Disability Insurance Scheme (NDIS) is a government initiative formed in 2013 to fund costs associated with disability. This government funding helps to improve the quality of life of participants, their families and carers, especially through the NDIS property investment scheme.
A shortfall of specialist housing was identified, and in 2016 the SDA (Specialist Disability Accommodation) was established to provide funding under the NDIS for custom homes that meet the needs of Australians with disability.
Many people with disabilities are living in aged care facilities simply because there aren’t enough houses available to suit their needs. We urgently need more specialist houses built in Australia, and the SDA funding under the NDIS aims to do just that.
The Government has sought to remedy the high demand and low supply for specialist housing by providing incentives to you, the investor!
You have the opportunity to help house the tens of thousands of Australians looking for comfortable and appropriate accommodation while enjoying some great investment benefits through the NDIS property investment, also known as NDIS housing investment.
What are the benefits of NDIS investing?
- Through NDIS investing, the Government is committed to providing a solution to the undersupply of specialist accommodation for Australians with a disability. This generous funding allows Australians approved under 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
- Having qualified participants as your tenants in your NDIS investment property comes with a multitude of additional benefits over having tenants who aren’t funded by the Australian government.
- 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 18%.
- 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?
The NDIS funding for SDA property provides excellent benefits to people with disability and investors alike; you could be thinking it sounds too good to be true! But there are a few barriers that you first to get through to take advantage of this incredible NDIS housing investment opportunity.
- 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 a lender’s 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 rental income 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 incredible 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