The UIDs entry for sddm places its home directory in /usr/local/etc/sddm/home:
sddm:*:219:219::0:0:SDDM Display Manager user:/usr/local/etc/sddm/home:/usr/sbin/nologin
This seems like a bad idea, since /usr/local/etc/ normally holds configuration files, and is often managed via systems designed for that purpose; having it contain a home directory is liable to cause unintended results.
It seems to me that the home directory should probably be somewhere under /var/
Sure, I see no problem with moving it in principal.
It may have been that we took gdm, which does the same as a template... too long ago to remember :)
*** Bug 245117 has been marked as a duplicate of this bug. ***