The benefits of investing in an NDIS property
Meeting the increasing demand for housing is a necessary challenge for governments and builders in accommodating the 3.96 million Australians and 1.1 million New Zealanders living with a disability.
The Australian Government is closing the gap when it comes to the supply of specialist disability accommodation (SDA) and, through the National Disability Insurance Scheme (NDIS), they are offering investors generous incentives to build houses that disabled people desperately need.
These incentives mean that investors receive an above-market rental income — achieving yields of up to 16 per cent.
Funding the cost of specialist disability accommodation is a key area supported by the NDIS.
Similarly, the New Zealand Disability Strategy was created to guide the work of government agencies on broad-reaching disability issues — from 2016 to 2026.
Both organisations serve to influence decision making on the health and wellbeing, education and economic choices that improve the lives of millions of people in Australia and New Zealand living with a disability.
Specialist disability accommodation (SDA) is an important component in fulfilling these essential needs. This sector is also proving to be a potential boon for investors.
The investment gains of an SDA
The government-backed security of an SDA means there is almost no risk with this investment — and unlimited returns.
Another major benefit is that there is no risk of vacancy. With increasing numbers forced to live in nursing homes due to the lack of SDA, your investment property will rarely if ever be left vacant.
An SDA also attracts a pegged return on the consumer price index. This has been designed so that your rental return will rise in line with inflation.
Government incentives ensure a return on investment that is around 500 per cent higher than traditional rentals.
A biophilic quality is also gained by making an ethical investment in the wellbeing and lifestyle improvement of renters living with a disability.
How to purchase an SDA property
Founder and managing director of NDIS Loan Experts and SMSF Loan Experts Yannick Ieko recommend several ways for you to purchase an SDA property.
“Firstly, you can purchase a property and adapt it based on SDA housing requirements. However, this tends to require substantial and complex work and the scheme sets a minimum spend the investor must be able to demonstrate to qualify as a new build in the scheme,” Mr Ieko says.
Alternatively, Mr Ieko adds that you can purchase an SDA property that is already approved and equipped to house NDIS participants. These can be sourced through real estate agents and specialist agents — but they are in short supply. Family Offices, investment groups and other institutional investors actively seek out these properties for their investment portfolios.
“The scenario we see the most for retail investors is for the house and land package. This involves the purchase of a block of land in an SDA-friendly location and then the construction of an SDA-approved house on that parcel,” Mr Ieko says.
How to find an NDIS tenant
This necessitates the connection of NDIS participants and SDA dwelling owners. But help is close at hand.
The NDIS operates under a broad market approach. On this basis, participants are expected to find and apply for advertised vacancies themselves. This is done in two ways. Either a participant finds their own property through real estate sites or via NDIS service providers that lease entire properties and rent out rooms to participants.