The NDIA has published the final payments system for specialist housing funded through the NDIS. This payments system is now in place for the next five years, after which it will be reviewed by the NDIA. It provides certainty about the payment rates and housing rules to fund housing for around 28,000 participants.
The final rules provide a significant amount of certainty for providers. It is now clear how much providers will be paid and the requirements for housing to be registered in the NDIS.
The final position builds on a draft paper the NDIA released in April 2016. It makes a number of changes to the detail of how the payments will work, but the big picture remains largely the same.
Our article from April 2016 provides an overview of the key features of NDIS housing. Any organisation or individual can be a provider of housing and will be paid by the NDIA using a standard funding formula. Only participants with specialist housing needs will get an NDIS housing payment (around 28,000 people) and the NDIA will determine eligibility. Payments are only made to providers when an NDIS participant chooses to live in the dwelling. For further background information see this article.
The final position paper does not provide any more information about the demand side of participant housing needs in different locations around Australia. We have undertaken some modelling of the potential need by state which you can see in the infographic below.
So, the key changes that are in the final paper that providers should be aware of in preparing their plan to develop (or redevelop) housing in the NDIS are in the areas of:
- Price adjustments
- Risk sharing and occupancy risk
- Separation of tenancy and support
- Phasing out large accommodation (6+ residents)
- Additional payments
- Clarifying tenancy and board arrangements
- Changes to the design specifications
- Multiple small clarifications
The final payment rates are outlined in the paper and are now set for the first 5 years.
The NDIA’s final payment amounts vary from the draft paper for many housing types, with some increasing and some decreasing. Organizations that have previously modelled their current or planned housing developments should review these in light of the new payments rates published in this final paper.
Overall, the major decreases in payment rates are for housing that is classified as having ‘basic’ or ‘improved livability’ accessibility features. Both new and existing housing see decreases in the payment rates for these low accessibility dwellings, but the decreases are especially large for existing housing. For example, there is a 40% reduction in the payment rate for an existing 3 bedroom house with a ‘basic’ level of accessibility (from $7,430 per annum to $4,452).
The increases in payment rates have mostly occurred for dwellings that are more accessible. For example, existing two bedroom dwellings that are ‘Fully Accessible’ have increased by 15% and 10% for participants classified as ‘High Physical Support’.
Risk sharing and occupancy risk
Providers only receive NDIS housing payments when an eligible NDIS participant lives in the dwelling. This has been an area of concern for providers as there is limited information about participant demand and preferences.
The NDIA has stood by providers wearing vacancy risk. There is no guarantee that providers that build housing will get an NDIS housing payment – they must attract participants to live there.
As we have outlined in our article on successful NDIS housing providers, the key to success will be investing in analysing the available data to build the most rigorous possible picture of demand in your local area.
The NDIA has made one adjustment to risk sharing. Dwellings with four or more residents will continue to receive payments for 60 days after a resident indicates they will move out, giving time to find the right new tenant. This recognises the importance of housing dynamics to the success of housing and to participant outcomes.
Our article on successful NDIS housing providers outlines what will differentiate successful providers from the ‘also rans’. One of the most critical success factors will be managing the uncertainty in occupancy risk. We recommend that providers:
- use sophisticated demand analysis to reduce the risk of building white elephants
- understand best practice housing design to ensure their housing remains both affordable and attractive in the medium term
- be innovative in designing in ‘tenant stickiness’ to reduce resident turnover, including through shared equity.
Separation of tenancy and support
The NDIA has made ongoing references to separating tenancy and support. The final rules for NDIS housing does allow support providers to also be providers of the bricks and mortar. But with two big caveats.
First, there must be separate agreements for the housing and the support arrangements. Separating the contracts is intended to push the sector towards treating housing and support as two separate items that can be mixed and matched, rather than combined in a single service offering. There will also be conflict of interest provisions introduced to maximise choice and control for participants.
Second, the NDIA is clear that ultimately they want to see housing and support provided by separately. This is intended to maximise choice and control by allowing the participant to choose where to live separately from how their support is provided. Participants should be able to continue to live in the same home even if they change support providers. The final rules imply that the NDIA may mandate this separation at a later point in time.
Phasing out large accommodation (6+ residents)
The NDIA’s final paper makes it clear that housing payments will not be available for new dwellings that accommodate more than 5 residents. All existing dwellings that accommodate more than 5 residents will have a period of payments from the NDIA, after which payments will cease. This period is 5 years after transitioning into into the NDIS for dwellings with more than 11 residents, and 10 years for dwellings with between 6-10 residents.
This means that in practice the NDIS will not lead to any new accommodation builds that house more than 5 residents. It also puts pressure on existing large residences to consider how they will be viable in the medium term, including encouraging redevelopment to provide smaller or more integrated living options.
The NDIA has included additional allowances (or clarified how these will operate) in response to feedback from the sector. The key additional payments are for:
- Additional maintenance costs for tenants with behaviours of concern. This responds to the feedback that some tenants will have behaviours that could lead to damage to the property and it is unclear who will bear the cost of this damage. This clearly states that the NDIA will bear this cost for identified tenants.
- Specific features. The NDIA will consider additional allowance for specific furnishings or additional feature that could be incorporated in dwellings that may increase the cost. This could include a communal area between dwellings.
Clarifying tenancy and board arrangements
The NDIA’s payment is for housing only, and the previous position paper did not outline how other expenses would be met, such as food, utilities and consumables. The final position states that any payments for board from the participant to the provider cannot exceed 50% of DSP. This means that participants will retain 25% of DSP, having paid a maximum of 25% of their DSP for rent (plus CRA) and 50% for board.
The NDIA also expects that tenancy agreements include the minimum requirements under applicable state or territory laws, as well as other reasonable requirements set out in the rules. These are mostly existing tenancy requirements such as providing receipts for rental payments and ensuring the property is kept reasonably secure.
In our article on successful NDIS housing providers, some providers are thinking about the potential for providing tenants with shared equity to build their ownership of homes over time. While this may add more complexity to the tenancy arrangement, it is likely to reduce occupancy risk and make providers more competitive in what will become a highly competitive NDIS housing market.
Changes to the design specifications
The final paper repeats the same four different accessibility classifications that determine the payment level and that providers must certify that their housing complies with. The final rules significantly simplify the accessibility requirements for each level.
The highly detailed accessibility requirements in the draft paper are replaced by a simple framework where accessibility classifications are simply determined by whether the property must meet either Silver or Platinum Livable Housing Design. And then whether the property has a small number of additional features that are required by the NDIA beyond Silver or Platinum.
This is good news for providers where the previous requirements were seen as onerous and complex. This new approach makes certification easier for providers and creates consistency between the NDIS and wider efforts to promote housing accessibility in Australia.
Multiple small clarifications
- Participants can pay more for housing that is above the specifications
- The NDIA will not certify or regulate properties
- The NDIA will no longer be increasing their housing payment rates for people who do not get CRA/DSP
- Parents and family can be the owners of dwellings, participants can use their housing payment to pay for housing that they own
- A family home will not be paid for by the NDIA – that is, the primary residence of related people other than the person’s partner and dependents
- The paper defines ‘new builds’ as have a certificate of occupancy post 1 April 2016
- Highlights the importance of amenity, although at this time is not regulating amenity.
The next three years will a time of innovation, trial and error in delivering on the NDIS’ housing vision. Ultimately we believe one thing is certain – the success of housing providers and communities will depend on experimentation and risk taking. There are no clear answers in how to achieve new NDIS housing places. We have an opportunity to create something transformational.