National Disability Insurance Scheme ‘specialist disability accommodation’ investment disasters revealed

For the first time, investors in NDIS “specialist disability accommodation” have spoken out about nightmare experiences that experts say threaten the $700m-a-year taxpayer-funded market.

Greedy property spruikers are profiteering from major flaws in a taxpayer-funded plan meant to rapidly increase the amount of NDIS “specialist disability accommodation”.

An investigation by The Daily Telegraph reveals spruikers are making false claims to entice self-funded retirees and SMSF owners into dodgy contracts for building and long-term management.

For the first time, dudded buyers are today speaking out, joining experts to demand proper oversight of the National Disability Insurance Scheme’s specialist disability accommodation (SDA) sector to avert a crisis of confidence that could limit the living options for the extremely impaired.

With seemingly no restrictions on what can be said in marketing material, property spruikers are touting “government-guaranteed” rental payments made from tenants’ NDIS packages.

But the claim of a government guarantee is false because there is no payment when a property is vacant.

The SDA property of investor ‘Shauna’. Picture: Supplied

Boosters are accused of glossing over this, even though there is a heightened risk because the properties they are peddling are further away from vital amenities and are built to a lesser standard than what is being produced by serious operators in the sector whose buyers are big institutional investors not individuals.

Self-funded retiree ‘Shauna’ – who did not want to give her real name due to a fear of retaliation by the SDA registered provider with which she has invested – outlaid more than $570,000 from her self-managed super fund for a new home for two people after being convinced it was a good thing to do both financially and ethically.

‘Shauna’ will have less time for grandkids due to returning to work. Picture: Danielle Smith

But the lack of ethics of the provider has plunged the NSW woman into financial disaster and she now faces having to return to work as a nurse.

The provider did not find any tenants in the first year. Shauna ended up finding one herself. In the second year, her investment return will be about four per cent – well below the inflation rate. Despite being newly built and until recently unlived in, the house has needed thousands of dollars of repairs.

Shauna, who looks after her grandchildren two days a week, said she is being underpaid by the registered provider.

She also said the provider had as many as nine different related entities that she is forced to use under her 20-year agreement, for everything from moving the lawn to electricity and the internet. Each charge over the odds.

“I’ll be 82 before I finish my head lease,” she said. “I wish I could get out of it.”

Shauna wrote to NDIS Minister Bill Shorten, but the reply came from the National Disability Insurance Agency, which said the situation was the responsibility of the NDIS Quality and Safeguards Commission. She wrote to that body in March but has to speak with them.

She also tried the Australian Competition and Consumer Commission, which referred her to Queensland’s Office of Fair Trading, which wouldn’t help either.

“I’ve written to everyone I can possibly think of,” Shauna said. “There needs to be a body that I can tell about this.”

NDIS Minister Bill Shorten. Picture: NCA NewsWire’s Martin Ollman

Another investor who was roped in by a cowboy said: “There is so much money in the NDIS. It has drawn out unethical people for greed.”

Her new house in a small Queensland town has dramatically underperformed as an investment due to tenancy problems, incorrect payments, expensive repairs and high maintenance bills.

The woman, who asked not to be named, was highly critical of Mr Shorten, noting his involvement in the NDIS since day one.

She wrote to Mr Shorten, who referred her to the Australian Securities and Investments Commission, which said her situation was outside its jurisdiction.

Of Mr Shorten, the woman said: “This was your baby. You are asking the community to fund these houses for disabled people because you can’t. But if this doesn’t work then you are taking away their choice and control.”

Despite ASIC being unwilling to get involved, deputy chair Sarah Court said it was concerned about the use of phrases such as “government-guaranteed”.

ASIC deputy chair Sarah Court. Picture: Supplied

Ms Court also said claims that SDA was a form of “ethical investment” was “certainly … attracting our attention,” as were pitches aimed at people with SMSFs.

“There are real areas of concern in promotions,” Ms Court said.

“I certainly wouldn’t rule out that we might take some form of enforcement action down the track.”

Michael Lynch, chairman of the body for scrupulous providers, the Specialist Disability Accommodation Alliance, said “more than 90 per cent of the sector is operating to generate positive outcomes for (NDIS) participants.”

But “there needs to be a crackdown on unethical spruikers that don’t understand or properly disclose risks to investors, to avoid the erosion of confidence in specialist disability accommodation investment,” Mr Lynch said.

“At present this behaviour seems to fall into a regulatory crack creating the need for more effective market stewardship and engagement from relevant authorities with some interest or potential role in oversight, as there isn’t a single body that has taken ownership of dealing with investors that have been the victims of unethical or misleading behaviour.”

Mr Shorten’s spokeswoman said “while this matter raises issues better dealt with by planning, financial and tenancy authorities, the (Q&S) Commission will take an active role where there is misleading advertising and relating to NDIS supports.”

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