What's Changing in the SDA Market

So far 2019 has been a really great year for Specialist Disability Accommodation (SDA). We have seen policy change that will drive investment, more streamlined processes for Participants and a genuine commitment to consultation from the NDIA. So let’s take a look at what has happened over the past few months.

New Price Guide

A new SDA Price Guide for 2019/20 was released in July. The prices have all been increased by 1.3%. However, more notably, location factors remained the same. Location factors are adjustments to the SDA price based on the relevant cost of developing SDA in a particular location. For example, it is more expensive to develop SDA in inner Sydney than in Geelong. It was hoped that in the new Price Guide the multiplier for many locations would be changed, so it is disappointing that this did not happen in this Price Guide.

However, we understand that the Agency has an out of sequence price review in its final stages. We believe a new Price Guide that includes some changes to location factors is in draft stage, expected to be released in coming months. So stay tuned!

 

Investors Beware

Sadly, but unfortunately not unexpectedly, there have been a number of entities popping up online and in property investment publications that are advertising SDA purely in terms of return on investment. This is happening both domestically and internationally. Some are even advertising a 40% return with a residency visa thrown into the deal.

SDA was definitely designed to generate a “better than market return.” This is to attract much needed investment to deliver on these highly specialised homes for a small percentage of the population. But there is so much more to a successful SDA project than the “bricks and mortar.” The process involves co-design, matching homes to an individual’s needs and goals, building a support framework around the person, considering location, and sourcing funding. All of these steps are highly complex, and take skilled people a considerable amount of time and effort to pull together. Ultimately, the goal is for a person to have a home that they can live in independently with appropriate support. Advertising SDA as a simple, high yield investment opportunity is misleading at best.

As time progresses, it will be interesting to see how some of these entities fare and how the Agency and/or Quality and Safeguards Commission might respond.

 

SDA Design Guidelines

There are currently no dedicated design guidelines for a SDA dwelling. Instead, developers need to reference the Liveable Housing Australia guidelines, along with various additions by the NDIS. However, back in February the Disability Reform Council response to the SDA Framework made a commitment that specific guidelines would be developed. As a result, the NDIA tasked the Master Builders Association to form an expert committee to draft new guidelines in consultation with the Agency and industry stakeholders. Drafting commenced in March this year.

In May, the expert committee presented the final draft of the new SDA Design Guidelines to the NDIA. It is understood that the Agency has nearly finished reviewing them. It is really encouraging to see the appropriate amount of time being dedicated to developing the Guidelines. My prediction is that we can expect them to be released towards the end of August or early September. Having been involved in the industry reference group review, I have been really impressed with the evolution of the guidelines, the level of consultation and the involvement of so many different stakeholder groups.

It is understood that there will be a grace period where existing developments that are substantially designed or under construction can be certified against current requirements. The new guideline requirements are expected to formally take effect of 1 July 2021.

Once the design guidelines are finalised, it is believed that there will be a corresponding SDA certifiers training program. Details of how this program will be developed are not available at this stage.

 

Dwelling Conditional Registration

The NDIA is looking into developing a two-stage registration process that takes some of the risk out of enrolling dwellings. This also has the added benefit of providing the Agency and the market with a SDA supply pipeline. So far, there has not been much news forth coming about this process. This is largely because it is linked to both the updated Design Guidelines and the SDA assessor training. More details will probably be released around the same time as the Design Guidelines. It is expected that under the new process providers will be able to submit the certified plans of the proposed dwelling for pre-registration. Final registration of the dwelling would then occur at completion, once the certificate of occupancy has been issued.

 

Independent Living Options – ILO

Get used to hearing the term “ILO,” as we believe it is going to become a lot more prevalent in the NDIS in years to come. ILO has its origins in Western Australia, where their individualised approach to disability supports has led to the development of a number of innovative living scenarios. The idea is for both supports and living arrangements to adhere to contemporary disability practice and maximise community integration and participation. It includes options such as living with a host or living on your own with tailored support (ie. not 3 x 8 hour shifts). DSC understands that there are around 1,500 people with ILO at this time with approximately 1,000 of these being the previous state clients in WA. There is a dedicated project team in the NDIS that are working to formalise the options and price approach for ILO over the balance of 2019 with a possible larger scale implementation early 2020.

If you are interested, DSC’s upcoming workshops will cover more about ILO and other housing and living options.