Big SDA News - States Begin to Reveal In-Kind Positions

Since the release of the SDA Rule in March, the registration by states of existing “in-kind” housing has presented a significant barrier to those considering SDA development due to uncertainty about how the states would treat their existing disability housing stock.

Over the last few weeks there has been a wealth of detail become available regarding some State Governments positions regarding their existing stock of social and disability housing. This is vital information if you are considering investment in SDA. The key points by state are as follows.

 

Queensland

The Queensland Government via the department responsible for housing - the Department of Housing and Public Works (DHPW) has advised that with respect to the existing portfolio of public housing the government will:

  1. Not register existing public housing stock for SDA.
  2. Not allow a community housing provider (CHP) who currently leases any of the state’s public housing stock to register as SDA, and
  3. Allow CHP’s to register existing stock and new builds provided the state does not have a funded interest in the stock.

At the time of writing the Department of Communities, Child Safety and Disability Services (DCCSDS) had not expressed a position regarding properties that they own, lease or have an interest within. This is largely specialist disability residential accommodation (e.g. group homes).

Should DCCSDS decide to allow registration of their limited stock, which would be fully occupied, it is not expected to address the short fall in SDA required to meet growing demand. Within Queensland it appears that “in-kind” registration of properties is not going to have much of an impact on the opportunity to provide new SDA properties.

 

New South Wales

Within NSW DSC understands the existing properties owned by Ageing, Disability and Home Care (ADHC) will be head leased to providers and will be able to be registered as SDA. The leases will be 5 years for properties older than 10 years and 10 years for newer properties and the consideration within the leases will be based upon a percentage of SDA + reasonable rent contribution (RRC) payments.

At the time of writing the exact lease terms have not been released but assuming the percentage of SDA + RRC model is correct, and there are requirements for payments regardless of occupancy, this is likely to place emphasis for service providers to keep tenants within the ADHC properties rather than placement within newer, smaller style accommodation.

The registration categories possible are also largely unknown at this time although it is assumed that the majority will be “existing” stock and the actual category will depend upon assessments of each property (which we understand FACS has been undertaking over past months).

Once the lease terms are known, anticipated late June 2017, a more clear opinion on the potential impacts can be made however at this stage it appears that within NSW the in-kind registration may have more of an impact to the supply of new properties. It is also understood the NSW are still considering a divestment approach for the ADHC properties however a decision on this has not been made at this time.

 

Victoria

The Victorian Government will also register as an SDA provider and claim SDA payments for the majority of properties currently operated in Victoria. The Department of Health and Human Services (DHHS) owns or has an interest in over 75% of the total disability housing stock in Victoria.

The Victorian Government is continuing to work through its approach to whether it hands over management of any SDA properties or SIL services to the non-government sector. The Victorian Government did issue an Expression of Interest Process for some of its SIL services.

The Victorian Government will continue to play a very significant role in regulating SDA. In fact, the DHHS default is that SDA providers will not  facilitate their own process to find tenants. SDA providers must opt out of DHHS facilitating the tenant selection process for their properties. These arrangements are outlined in the DHHS Offering residency in Specialist Disability Accommodation – Policy and Standards document.

Any SDA provider in Victoria will need to opt out of DHHS facilitating the tenant selection process, and to opt out will need to demonstrate to DHHS that the SDA provider has a range of policies and procedures in place to select their own selection process. DHHS can refuse to allow SDA providers to manage their own tenancy selection process if the SDA provider cannot satisfy DHHS that they have these procedures in place.

 

Upcoming Webinar: 

As each state across Australia places their own requirements on SDA provider registration, combined with the likely ongoing compliance requirements, the decision to either register SDA yourself or to head lease to a provider is a very important decision for those contemplating SDA development. Our upcoming SDA: Head Lease or Register? webinar will cover the key considerations in reaching a decision.