The Top 5 Things You Should Know About an NDIS Investment Property

NDIS housing, under the umbrella of the National Disability Insurance Scheme (NDIS),  is a pivotal initiative by the Australian Government introduced in 2016 to enhance the well-being of disabled Australians. Currently, the government estimates that there are around 4.4 million Australians that live with a disability. 

One of the key components of the NDIS is the Specialist Disability Accommodation (SDA) programme. SDA housing is property that has been specifically designed to accommodate individuals that have high support needs or an extreme functional impairment.

Unfortunately, there is a severe shortage of suitable accommodation, so, there is a significant demand to establish more suitable dwellings. As a result, the government has appealed to private investors by offering higher than average market rents and long tenancy periods. 

While there are several hoops you need to jump through to own an NDIS property, the current high returns could make this a great investment option for property investors. 

But as with any property investment opportunity, there is a range of things you need to know before committing to an NDIS property investment. To help inform your decision, here are the top five things you should consider.

1. Investing in Specialist Disability Accommodation Also Requires Due Diligence

While NDIS properties are in high demand and offer great returns on paper, it is important to remember that any investment carries risk, and you should always carry out due diligence before making any decisions. 

Beyond the traditional due diligence steps, such as getting pre-approval for a home loan, conducting inspections, and making sure you have sufficient cash flow to sustain your lifestyle and the investment, it is essential to make sure that you understand the special requirements that must be met in order for the NDIS property to be certified. 

You will also need to do your research to make sure that you are buying in an area where there is strong demand for this type of accommodation. This could be an area where there is a low supply of NDIS-compliant properties or an area where there is a high concentration of NDIS participants. 

And to take it one step further, you’ll also need to take into account the challenges the specific tenants in that area face in finding suitable accommodation. By taking the time to assess the specific needs of each tenant, you can ensure that your property is best-suited to their individual requirements.

For example, someone with a physical disability may need wider doorways and hallways to accommodate a wheelchair, while someone with a cognitive impairment may benefit from having clear signage and well-lit rooms.

As the industry is subject to government regulation, review and funding this needs to be monitored constantly for any changes that may impact the outcomes. 

All of this means that you’ll need to invest more upfront costs compared to building or renovating standard investment properties. So, you’ll have to account for this when working out if this is a financially feasible investment in light of your circumstances and investment objectives.

All of this means that you’ll need to invest more upfront costs compared to building or renovating standard investment properties. So, you’ll have to account for this when working out if this is a financially feasible investment in light of your circumstances and investment objectives.

2. There are Several Ways You Can Purchase an SDA Property 

The first way of going about investing in SDA properties is to modify a traditional property to meet the necessary standards. This is probably the most complex option out of the three, but there are building contractors and architects out there that offer specialised offerings for modifying homes to meet the SDA standards.

There are also SDA advisory organisations that can give you guidance on the way forward to ensure that you’re taking all the right steps. 

So, if you have an existing property in an area where NDIS properties are needed and the funds to renovate or modify it, this may be the best option. 

The second option is to purchase approved SDA housing that is already built and equipped to house NDIS participants. You can use an SDA provider and specialist real estate agent to help you source properties, but unfortunately, the supply is relatively low for existing properties. Therefore, you may struggle to find the right property. 

The third, and most common, option is to purchase a house and land package specifically designed as an SDA property. Besides the fact that this option is likely to be the most hassle-free way to purchase an SDA property, there is a desperate need for newly built properties because the existing supply of NDIS housing is low. 

3. Each NDIS Property Investment Must Meet Certain SDA Provider Standards 

The purpose of the NDIS SDA property programme is to provide safe and attractive housing options for people with disabilities, promoting more independent living arrangements. So, the SDA standards aim to improve liveability for residents by ensuring that the accommodation is fit for purpose and meets their specific needs.

For example, SDA standards require that these properties be accessible and have enough space to accommodate wheelchair users, as well as features such as level entryways, wide doorways, and accessible power outlets. All kitchen appliances must also be accessible regardless of whether the resident is seated or standing. 

What’s more, SDA standards require the properties to be more robust than conventional properties, which reduces the likelihood of reactive maintenance. This means that NDIS participants can be confident that their homes will not require significant repairs or replacements in the near future. 

And lastly, to enrol in the NDIS, each dwelling must meet certification standards. You can access most of the requirements and obligations for SDA in the NDIS (Specialist Disability Accommodation) Rules 2021 (SDA Rules).

4. SDA Funding is Attached to the National Disability Insurance Scheme Participant, Not the Property

While NDIS compliance is an important step in becoming eligible for SDA funding, it is not the only requirement. 

To receive SDA payments from NDIS service providers, you must have an approved NDIS participant who is willing to rent your property. Without a tenant, you will not be able to receive any funding, no matter how compliant your property may be.

This is due to the fact that the SDA funding serves to help cover the costs of care and support for people with disabilities, not to subsidise landlords who have built specialised housing for disabled people. 

In other words, the process is essentially the same as securing a tenant for an ordinary investment property—unless you can find a tenant for your SDA-compliant property, you’re not going to see rental returns. 

5. Your NDIS Investment Property Has Tax Implications 

Just like any other investment property, you’ll be required to pay income tax on the rental income you generate from your SDA dwelling. In the same breath, however, you’ll also have access to the various investment property tax deductions such as depreciation, rental expenses, and interest on your mortgage. 

It’s worth noting that, as building costs are higher and plant and equipment requirements are greater, you’re likely to be able to claim higher depreciation deductions compared to a traditional investment property. So make sure to get your hands on a tax depreciation schedule from a qualified quantity surveyor to ensure you’re getting the most out of your tax deductions. 

Key Takeaways

The NDIS is a government initiative that provides support for people with disabilities. One of the main ways it does this is by providing funding for accommodation and care services. This has created a growing market for NDIS-compliant properties, which are purpose-built to meet the needs of people with disabilities.

For new investors, SDA properties can be an excellent way to get started in the property market. With careful planning and research, they can provide a sound foundation for a successful investing future. But as with any investment, you’ll need to stay on top of your tax implications. 

At Property Tax Specialists, our team of experts can help you structure your property ownership to legally minimise tax liabilities, and we can advise you on the best way to protect your assets. 

Contact us today to find out more about how we can help you achieve your goals and enter the NDIS market.

FAQs

What Is an NDIS Property Investment?

An NDIS property investment refers to properties that are compliant with the National Disability Insurance Scheme (NDIS), specifically under the Specialist Disability Accommodation (SDA) programme. These properties are designed to accommodate individuals with high support needs or functional impairments.

Why Is There a Demand for NDIS-Compliant Properties?

There is a significant demand for NDIS-compliant properties due to a severe shortage of suitable accommodation for the estimated 4.4 million Australians living with a disability. The government encourages private investors to meet this demand by offering higher-than-average market rents and extended tenancy periods.

How Can I Invest in an NDIS Property?

There are three primary ways to invest in an NDIS property:

• Modify an existing property to meet SDA standards
• Purchase an already built and approved SDA dwellings
• Buy a house and land package specifically designed as an SDA property

What Are the SDA Standards for NDIS Properties?

SDA standards ensure that NDIS properties are accessible, spacious, and equipped to accommodate the specific needs of residents with disabilities. Features might include level entryways, wide doorways, accessible power outlets, and kitchen appliances that are accessible whether the resident is seated or standing. 

The NDIS (Specialist Disability Accommodation) Rules 2021 provides detailed requirements and obligations.

How Is Funding for NDIS Properties Managed?

Funding is attached to the NDIS participant, not the property itself. This means that to receive SDA payments from NDIS service providers, you must have an approved NDIS participant renting your property. Without a tenant, you won’t receive any funding, regardless of the property’s compliance.

Are There Tax Implications for NDIS Property Investments?

Yes, like any other investment property, you’ll need to pay income tax on the rental income from your NDIS tenants. However, due to the higher building costs and equipment requirements of NDIS properties, you might be eligible for higher depreciation deductions compared to traditional investment properties.

Where Can I Find an NDIS Property for Sale?

You can consult with SDA providers, specialist real estate agents, or SDA advisory organisations to help you source or modify properties suitable for NDIS accommodation.

How Does NDIS Housing Investment Differ from Regular Property Investment?

While NDIS properties offer high returns due to demand, they require more upfront costs, adherence to specific standards, and continuous monitoring of government regulations. Additionally, securing a tenant is crucial as funding is attached to the NDIS participant.

Can I Modify My Existing Property to Meet NDIS SDA Standards?

Yes, you can modify a traditional property to meet SDA standards. However, this might be a complex process, and it’s advisable to consult with building contractors, architects, or SDA advisory organisations that specialise in these kinds of modifications.

Disclaimer

Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.5.