EPISODE 146 - Claiming SDA Payments: Section 13 of NDIS Pricing Arrangements

EPISODE:In this episode, Jess from our office sits down with Minh again, to talk about a very 'complicated topic'. This topic is about summarising Section 13 for claiming SDA income where "the lesser of rule" is used in determining the value of the SDA income per Participant in the SDA dwelling. This is specifically known as:Section 13 of NDIS Pricing Arrangements for Specialist Disability Accomodation 2022-23 (Released March 2023)When claiming payment for SDA from an individual participant's plan, a provider is only able to claim the lesser of:The maximum per participant price for which the dwelling is enrolled; The amount of SDA funding for which a participant has been assessed (i.e the amount to the SDA in their planThis is an unknown rule which is part of the SDA PRICE GUIDE which 99% of investors are unaware of (unless disclosed by your SDA Provider) as it is rarely made aware of to investors. The SDA providers should know this, and investors 'may not know this'. Unfortunately, investors are only told about this when they have engaged the SDA Provider. Because they normally engage the Provider once the property has been purchased (or built), this Section 13 rule is unfortunately not discussed with investors (if at all) until very far down the track. We are doing our bit in this podcast to summarise it in a nutshell, to let our listeners know about this 'grey little area'.Let's use a practical example, to better explain to you, to better understand the numbers. If an SDA Provider enrolls a property for 2 SDA Participants only, and an investor sees that the maximum potential SDA Funding for an IL Participant is $77,000pa (SDA & RRC income), it doesn't necessarily mean that the property investor will get $154,000 (77,000 x 2). There are many other potential lower income amounts which will apply to the outcome of the investment. See below for the variations we refer to:Example Only - IMPROVED LIVEABILITY 'potential outcomes'IL - Apartment 2 bedroom (1 resident) ... not relevant in podcastIL - Apartment 1 bedroom (1 resident) ... not relevant in podcastIL - House 4 bedrooms (3 residents) - $56,000paIL - House 3 bedrooms (2 residents) - $77,000paIL - Villa 3 bedrooms (2 residents) - $43,000paIL - Villa 2 bedroom (1 resident) - $65,000paIn this episode, Minh and Jess discuss the combinations of the potential IL participants, coming into a 3 bed 3 bath 2 car 'SDA house', which will have OOA + 2 IL participants. Let's say the house land package is $750,000 in cost, thus we will now work out the gross yields for each combination possible. The numbers below are being discussed in this podcast, for listeners to better understand this section 13 rule.20%pa # - IL (1:2) + IL (1:2) = $154,000 gross income 17%pa # - IL (1:2) + IL (1:3) = $133,000 gross income 16%pa # - IL (1:2) + ILv (1:2) = $120,000 gross income 13%pa # - IL(1:3) + ILv (1:2) = $99,000 gross income 11%pa # - ILv (1:2) + ILv (1:2) = $86,000 gross income "v" denotes VILLA"#" denotes a shaving off, of 3-4%, to get an estimated 'net yield'DISCLAIMER:Information contained in this podcast is general in nature only. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information and should seek independent and professional advice for your personal circumstances.Send us Fan MailNDIS PROPERTY AUSTRALIA:Our team conducts thorough research on Specialist Disability Accommodation (SDA) and provides appropriate technical advice through premium and strategy-based solutions. We also use complex feasibility calculation spreadsheets to help investors understand the expected annual income of an SDA dwelling, the timeline stages of construction of their property, as well as revealing the hidden costs. By staying up-to-date with the latest SDA data and pricing payments information, we help clients make better-informed decisions and achieve their investment goals.FOLLOW US:LinkedInInstagramFacebookCONTACT:Please feel free to call us on 1300 254 397 to talk to one of our friendly staff, otherwise,  just pop on over to our website to find out more.For any podcast related queries or suggestions, please contact our podcast team via [email protected]