The SDA is being rolled out with a model of funding that is based on the needs of each participant. This has a number of benefits.:

Participants can choose where they want to live on their own, instead of a government agency telling and deciding on applications from providers.

The level of funding will stay the same, and it won't change based on grants or policy decisions that bring in a lot of money; and When people have choices, funding can go to a wide range of providers who can offer different products and new ways of doing things, rather than just to a few well-known providers who know how grants work and have tried-and-true models for housing and support. Basically, this means there is more competition in this space because it is driven by the people who use it.

Opportunity – Lack of supply and exponential growth

At the start of the SDA program in 2011, the Productivity Commission said that 28,000 Australians would need SDA funding when it was running at full capacity. This meant that about 6% of all NDIS participants were in this group.

Estimates made after the SDA program started have shown that about 50,700 people are likely to be eligible for it. This is more than twice what was first thought, and it shows that the need for this kind of housing will only grow. Among these numbers are:

17,500 people already living in supported disability accommodation; 27,000 people who are not in supported accommodation but have very high care needs; and 6,200 people aged under 64 who are living in residential aged care.

These numbers show that SDA providers have a big chance to help people. The Commonwealth Government has decided to use a market-led and -driven approach. It is thought that when the SDA program is running at full capacity, it will bring in around AU$5 billion from the private sector. With this market-driven approach, there has been a conscious effort to get more information about SDA demand, give participants more options, get young people out of elderly care, give investors clearer and more consistent information, and set up a better pricing review cycle.

Types of SDAs

SDA homes can be put into three main groups. Depending on what category a home is in, a participant will be able to get a different amount of funding, which will affect how much an SDA provider can "charge." If a house doesn't fit into one of the following categories, it can't be in the program and get SDA payments.

The three broad categories of SDA dwellings are:

1. New Build;
2. Existing Stock; and
3. Legacy Stock.

These categories are further divided into four types of buildings:

1. Apartments;
2. Villas, Duplexes and Townhouses;
3. Houses; and
4. Group Homes.

The last grouping is the design category. The SDA price limit for a home depends on which design category the home is registered under. Which of the five design categories a house is in depends on how much support it has. Since the new design standard went into effect on July 1, 2021, all SDA providers who want to enroll new buildings must include a certification from an SDA assessor that the building meets the SDA design standard.

The types of design categories are:

1. Basic;
2. Improved Liveability;
3. Fully Accessible;
4. Robust; and
5. High Physical Support.

How the payment works

Historically, NDIA transferred SDA payments directly to the SDA supplier. Currently, however, payments are made directly to the NDIS member, who subsequently transfers them to the SDA provider. Participants receive funding based on an appraisal and analysis of their aims, preferences, the reasonable and necessary test, SDA eligibility criteria, and whether or not the SDA in issue provides a decent return on investment.

The NDIS Pricing Arrangements for Specialist Disability Accommodation describes how SDAs are compensated and how much they are permitted to charge. This agreement also specifies how much SDA service providers are permitted to charge.

The amount of compensation an SDA provider receives depends on a variety of factors.

• Whether the dwelling is new or existing;
• The level of accessibility in the property;
• The type of dwelling; and
• The location of the dwelling – this can significantly reduce the payment or significantly increase the payment particularly in high density inner urban suburbs where demand for housing is high.