Uncertainty Continues to Stifle $2.5bn SDA Sector

Many Specialist Disability Accommodation providers remain under significant financial pressure due to ongoing uncertainties in the market as well as challenges in dealing with the National Disability Insurance Agency, which in turn is creating supply issues. 

SDA, a now $2.5-billion asset class, accounts for an estimated 30,000 people or 6 per cent of the National Disability Insurance Scheme participants.

Despite commencing in 2016, SDA funding is currently only being paid to just over half of those NDIS participants with many still living in government housing, hostels, residential aged care or with family. 

NDIA had originally forecast that all 30,000 participants would be receiving SDA payments by 2025. As at mid-2022, a total of 19,300 participants in 7000 dwellings have received SDA support funded through their NDIS plans.

Alecia Rathbone, chief social enterprise officer at SDA platform Housing Hub, told The Urban Developer that sentiment within the six-year-old sector was dipping due to “opaque” and “slow” decision-making by the NDIA due to its misunderstanding and mismanagement of its participants and pipeline.

Rathbone, who is also the general manager of non-profit advocacy group Summer Foundation, will be among speakers at The Urban Developer’s upcoming SDA vSummit.

“The biggest issue in SDA is that there is a lack of demand. To have that many people with money in their NDIS plan, to go and buy or rent a property, and six years in having only half of the delivered, it’s really concerning,” she said.

▲ A lack of market information allowing developers and operators to anticipate the types of housing that is needed and where it is needed.

Rathbone said the fact that so many people who were eligible for SDA funding were not yet receiving payments was not necessarily an indication of insufficient demand for housing, rather, administrative inefficiencies in identifying eligible NDIS participants and getting SDA funding approved.

“On the other side with completed projects, in some scenarios, participants have requested a certain type of SDA, based on advice from doctors and medical professionals, but will get something completely different,” she said.

“That rocks confidence for people trying to enter this system and it also means that there aren’t as many people getting into SDA as quickly as they should and that’s what’s leading to the 18,000 that have it and the 30,000 that should.”

Prior to the NDIS and the SDA market, housing and support for people with disability was a welfare model, whereas, in a market-based system, the NDIS invests in people with disabilities with the aim of maximising their independence and community inclusion, and reducing the long-term liability of the scheme.

To enrol an SDA property with the NDIA, SDA providers submit information on the design category, building type, number of bedrooms, and location of the dwelling.

In terms of building type, apartments dominate the SDA landscape, but some jurisdictions are seeing growth in the pipeline of houses and other building types. With respect to SDA design categories, the supply of high physical support homes is strong in a number of jurisdictions. The pipeline of robust homes is less well developed.

Currently, two in five providers within the sector are private housing developers while one in five are not-for-profit disability service providers.

▲ The problems hindering providers include long wait times for SDA funding decisions as well as uncertainty around eligibility.

Rathbone said there remained significant room for improvement in order to achieve more streamlined and transparent SDA processes, and communication with NDIS participants and SDA providers. 

“There is definitely a need for more quality data in this sector to help identify people who are in the wrong places and get them funded and moved into the right accommodation more rapidly. We can’t just rely on the government,” she said.

“There are more than 1000 people with disabilities in hospitals right now who could be approved for funding and thousands in residential aged care. We know who they are, people just need the right money for housing and support. That’s within the control of the NDIS to approach quickly and efficiently.

“There is a two-year lag time that we know is needed for a development to be delivered and people are losing confidence and it’s all about rebuilding that confidence in the market by getting people moving through the system and into the right accommodation more rapidly.”

The recent change in government has meant a renewed push to better SDA with a review of pricing recently launched to evaluate the impact of prices on supply and demand and set a new price guide to stimulate market investment over the next five years.

The outcomes of the SDA pricing review will take into account any early findings of the broader NDIS Review—designed to deliver on an election commitment to improve the scheme as well as operation and sustainability. The pricing review will be implemented from July 2023.

Rathbone will deliver the opening keynote presentation at The Urban Developer’s coming SDA vSummit on Thursday, September 15.

The vSummit will include more than 15 industry experts delivering infightful presentations, case studies and panel discussions delving into the latest research and perspective on the current state of the six-year old sector and its outlook for the future. 

To register for the event, click here.