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What is the NDIS?

NDIS is the National Disability Insurance Scheme.

It started in 2016 and is a government initiative to fund the needs of Australians with disability (known as participants).

The scheme aims to help 28,000 Australians move into accessible and affordable housing called Specialist Disability Accommodation (SDA), to provide specialist dwellings that fit the requirements of people with disabilities.

The scheme takes a lifetime approach to improve the well-being of the disabled person and also their family and carers.

Does NDIS help with housing?

Yes, the NDIS help with housing, but the funding for the houses are only catered to a small niche of people who require a high level of support.

As part of the scheme, the NDIS will also fund builds for Special Disability Accommodation (SDA) to encourage investment from the private sector.

The government has pledged to fund of $700 million for 20 years, with investor returns anticipated at 10% to 12% per annum.

This would allow participants and their families and their carers to have a secure long term housing solution.

SDA providers will work towards developing and building suitable properties via partnerships with investors, developers and builders to participants who are eligible for SDA payments as part of their NDIS plans.

How to get approved for an NDIS investment loan?

Some Australian banks have become lenient when it comes to lending money for SDA projects.

Besides providing home loans for participants, banks are encouraging investment loans for family, friends or any interested investor.

Since there is a 20 year payment guarantee from the government for SDA projects, banks are willing to lend to people with a deposit of 20%.

Here are some ways you can get a loan approved for SDA funding:

  • Find an SDA complaint builder who knows the requirements of the participants.
  • Get a deposit of at least 20% so you do not have to pay Lenders Mortgage Insurance.
  • A good credit history.
  • Exceptional credit score.
  • Stable employment with good income.
  • Build or make renovations on housing that has an adaptable design to accommodate people with different disabilities. Start your NDIS property investment journey with confidence – use the 360° Home Loan Assessor today!

How much can you borrow?

Borrowing to build a Specialist Disability Housing is generally limited between 75% to 90% as this is a niche segment that is still growing.

Furthermore, you might be able to borrow more if you plan to invest in a property that requires more improvements according to the SDA Design Category.

You can borrow up to:

Call us on 1300 889 743 or fill in our free assessment form to talk to our brokers regarding NDIS property investment loan.

Why should I invest in SDA?

Before NDIS was implemented, the funding for housing people with disabilities mostly came from governments or non-profit providers using upfront capital grants.

Now, there is a growing appetite among investors for impact investing and Australian banks have become lenient and started to lend to finance SDA projects.

Banks are providing the following:

  • Home loans for participants (Bank LVR: 60% to 80%) (Shared equity LVR: 100%)
  • Investment loans for family, friends or value-aligned investors. (LVR between 60% to 80%)
  • Shared equity loans for participants and families. (LVR between 60% to 70%)
  • Commercial loans for Community Housing Providers (CHPs) and other SDA providers. (LVR between 60% to 70% depending on valuation methodology and risk analysis)

Out of the 400,000 participants in the NDIS, an estimated 28,000 of them qualify for SDA. 12,000 of them are most in need of suitable accommodation.

Out of the 12,000, half are living in aged care facilities, while the other half are living in unsuitable situations (inappropriate design, living with aging parents, etc).

The SDA scheme is designed to address the massive undersupply.

Demand is not the problem here, and if you can build the right home for the participants, then your property will not face the problem of vacancy.

Furthermore, the government wants to motivate private investment of $5 billion to encourage the build of brand-new residential properties built for inclusion in the scheme.

The government has committed $700 million per annum in the SDA scheme funding from the overall NDIS budget of $20 billion per annum.

Your investment home not only provides rental income, it provides the perfect home for Australians with disability out of inappropriate aged care and place them in suitable housing.

Who is eligible for NDIS?

To be eligible for NDIS, a person must:

  • Have a permanent disability that significantly affects the ability to take part in daily activities.
  • Be aged less than 65 years when entering NDIS. (An NDIS participant must be between the ages of 7 and 65).
  • Be an Australian citizen, or hold a permanent visa or Protected Category Visa.
  • Be living in Australia where NDIS is available.

Where is the NDIS available?

As of 2019, the scheme is available in all of Australia.

However, since it is rolling out on a phased basis, the demand for Specialist Disability Housing is concentrated towards New South Wales (NSW), South Australia (SA) and Victoria (VIC).

What are the challenges of getting a loan approved for SDA?

Since this is a nascent niche for lenders to be in, you are bound to face some challenges as an investor:

  • As the requirements for Specialist Disability Housing are quite specific, the cost of construction might exceed the final value. The property may become overcapitalised.
  • The property is only made for a specific niche of people, so it might be harder to sell later on.
  • Lenders generally do not prefer to lend to long terms leases to tenants. They would rather see you sell the property.
  • Since the property is extremely specialised (i.e. a normal abled tenant would not live there), some lenders would not accept it as security.
  • There could be problems with valuations as the property might be valued as a normal housing and will not account for the special modifications made to it.
  • The builder has to be SDA compliant – so the number is limited.
  • There could be high vacancy rates if the tenant moves out.
  • While you can build anywhere in Australia, there are concentration limits on land, so land approval might be an issue. There are restrictions on the number of dwellings that can be in a particular area.

What dwellings can I build?

You can build apartments, villas, duplexes or townhouses, stand-alone house and even group homes.

  • Apartments are self-contained units that are a part of a larger residential building.
  • Villas, duplexes and townhouses are perfect dwellings for up to three residents. They are separate semi-attached properties within a single land title or strata-titled area.
  • Houses are located on a clearly separated land area (that is separated by a fence, hedge, etc) and cannot share a roof, wall, entry area, driveway, car park, area, etc, with other dwellings.
  • Group homes are for up to four to five residents. Any of the above mentioned can be group homes provided there are a large number of residents living in it at a time.

Are there any design requirements that need to be fulfilled?

These are the following requirements for dwellings: