How do I calculate gross yield for my new NDIS property?

Property owners can expect to get rental returns from the funding provided by the NDIS to the participants tenanting their properties.

The formula used to calculate the rent per room is determined using various factors that form the input to the values in the NDIS SDA Pricing Calculator.

These factors include:

• Whether it is a new building or an existing/modified building (we will use a new H&L build as an example in this article)
• The type and configuration of the building - a house vs a unit or a villa and whether it can accommodate 1, 2 or 3 or more participants, along with onsite overnight assistance (OOA)
• Whether the dwelling meets the disability housing standards of High Physical Support or Robust or Fully Accessible or Improved Liveability and its number of breakout areas etc.
• It’s location - city, regional/metropolitan, state etc.

These values are then incorporated into the NDIS SDA Pricing Calculator to obtain the potential rent per room. Note that the potential rent amount is the NDIS funding allocated to the Participant who occupies the room. Only NDIS funding allocated to the SDA forms part of the SDA property’s rental return. The Participant may get other funds, including care services funds, employment assistance or Reasonable Rent Contribution (RRC) provisions through Centrelink, which do not form part of the SDA property rent.

The NDIS SDA Pricing calculator is available at: https://www.ndis.gov.au/providers/housing-and-living-supports-and-services/specialist-disability-accommodation/sda-pricing-and-payments .

The calculator spreadsheet as of June 2023 can be downloaded here: https://www.ndis.gov.au/media/6130/download?attachment.

Let’s look at a few examples scenarios:

• For a 2+1 (2 Participants, 1 OOA) High Physical Support House in Baulkham Hills & Hawkesbury Council, with input tax credit claimed, the SDA Rental per participant is $92,953.

• For a 3+1 (3 Participants, 1 OOA) High Physical Support House in Baulkham Hills & Hawkesbury Council, with input tax credit claimed, the SDA Rental per participant is $64,682.

Expenses

Expenses may include:

• Council Rates: estimated at $450 per quarter or $1800 p.a.
• Utility Infrastructure (not usage): estimated at $500 per quarter or $2000 p.a.
• Landlord’s Insurance: estimated at $800 p.a.
• Property Maintenance as per NDIS standards: fixed at 12.5% of the total potential rent at full occupancy, plus GST. (note that this could be upto 20% with some SDA providers)
• One-off Dwelling Setup fees: $8,000 plus GST (charged by the Disability Services provider)
• Participant Placement fees: $6,600 plus GST per participant (charged by the Disability Services Provider)

Potential return (Gross Yield)

Let’s use a 3+1 (3 Participants, 1 OOA) High Physical Support House in Bendigo Council. The SDA Rental per participant with input tax credit claimed is $52,865. Calculating the return on an, e.g. $900K new house at full occupancy is:

SDA Rental: $52,865 X 3 = $158,595

Estimated annual expenses: $51,026 (first year); $23,226 (second year onwards)

Estimated Return:

$75,596/$900,000 = 11.95% (first year)

$103,395/$900,000 = 15% (second year onwards)

These views are ours and we suggest you research the market thoroughly before making an investment or suggesting one

Note that, like any house and land investment, there are variations based on region, SDA providers, quality of the product etc. We have provided an example use case here and by no means suggest that all investments would surely have an 11% to 15% income year on year.

Specifically, the recruitment of tenants is an area that should be closely researched. You are depending on the SDA provider to help you with that. There are guarantees that providers issue that may not be completely guilt-edged. Also, attempt to get your hands on statistics around tenant numbers and houses available in the areas you are interested in. Some areas are over-served.