Defence Housing Australia (DHA) can help reduce investment property risks.

Like all investments, there can be risks in owning an investment property. Many factors can impact your potential returns, from the value of your property declining to problematic tenants.

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In this article, we’ll take you through four risks associated with owning an investment property and how Defence Housing Australia (DHA) can help reduce your exposure.

TABLE OF CONTENTS
> Risks of a problematic tenant
> Risks of having a vacant property
> Risk of purchasing in the wrong location
> Risk of issues arising from maintenance and repairs
> Partnering with DHA for your property investments

DHA is an Australian Government Business Enterprise that provides housing to over 15,000 members of the Australian Defence Force (ADF) and their families.

Most of the properties provided to our members are leased to DHA by investors.

This unique leasing program provides investors with a secure, long-term tenant and property care services that can offset some of the risks involved in owning and managing your investment property.

Risk of a problematic tenant

All landlords dream of securing a long-term tenant who takes care of their property, reliably pays their rent on time, and renews their lease year after year.

While every landlord tries their best to select a suitable applicant, we’ve all heard the horror stories of tenants failing to pay rent, damaging property, and removing fixtures. Attempting to recover these costs can be difficult and may even require paying legal fees.

Optional tenant protection insurance is available from most insurers as an add-on to your landlord insurance and can offset some of the risks of a delinquent tenant.

However, premiums can range from $280 to $450 per annum (inc GST), with some cyclone areas having higher premiums and limited provider options.

Unlike the private rental market, where an individual is your tenant, DHA is the tenant for our investors. It is DHA’s responsibility to place members of the Australian Defence Force and their families in the property and manage their occupancy. We also take care of most non-structural repairs without additional charge to the landlord.

With guaranteed rent* for the duration of your lease paid by DHA, there’s also no risk of lost income through late payments or not paying rent at all.

Risk of having a vacant property

Vacancy rates might be at all-time lows, but that doesn’t mean you’re guaranteed to receive rent for every week you own a property.

Given that the notice period of most tenants is only two weeks, even with the hot rental market, you may be out of pocket for some amount of rent if your tenant leaves. There is also a re-letting fee and marketing costs each time you advertise to find a new tenant.

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DHA’s leases are generally between six to 12 years, with the possibility of extensions. During the lease, guaranteed* rent is accrued daily and paid a month in advance from the day you sign a lease with us.

That means that even if the property is unoccupied, you’ll continue to receive your rent payments, provided rent has not been abated.

As finding occupants for the property is our responsibility, you will never pay re-letting fees or marketing costs during your lease.

Risk of purchasing in the wrong location

Knowing the future demand for an investment property is vital to ensure it will be popular with prospective tenants and future purchasers.

Properties close to where people work, transport links, local shops, and amenities like playgrounds will always be in demand.

DHA selects properties based on similar criteria. We want to place our members in homes that meet their needs and stage of life, while still being close to where they work.

Our young and single members wish to be in the inner city close to restaurants and nightlife, while families with children want to be close to schools, playgrounds, and shops.

Knowledge of lifestyle and employment requirements and demands allows us to provide landlords with the certainty of long-term leases.

We can offer leases of up to 12 years with possible extensions, with many of our investors continuing to keep their properties with us for more than 20 years.

Risk of issues arising from maintenance and repairs

Whether you’re keeping a property fresh to attract high-quality tenants and maximum rent, fixing an appliance that’s stopped working, or keeping up with general maintenance, your property will inevitably require additional investment.

While many of these costs are unavoidable and ad hoc, investing in repairs can help save you from more expensive bills over the long term.

As part of its Property Care Contract, DHA is responsible for organising and covering the cost of most non-structural repairs for its landlords. This includes ‘like-for-like’ replacement of appliances except where replacement is due to fair wear and tear.

DHA also finds and organises a licensed or suitably qualified tradesperson to undertake the work without you needing to be involved. DHA has appointed maintenance contractors across 36 trades through a tender program. So no matter the location, only thoroughly vetted and qualified trades-people will work on your property.

Partnering with DHA for your property investments

DHA is currently looking to partner with property investors who own or are looking to purchase or build a property.

If you own a property within 30kms of a Defence Base and it meets general requirements, you may be able to lease it to DHA.

You can check if your property is eligible to lease to DHA by simply entering your postcode and property detail online

If you are interested in purchasing a property to lease to DHA, we may be able to commit to leasing before you buy. Our Leasing Team can work with you to identify properties that meet your investment goals and our current provisioning requirements. Call 133 342 to speak with our leasing experts in the regions where you are interested in purchasing.

Finally, if you would like to build a property to lease to DHA, call our Leasing Team on 133 342 to see if your planned build meets DHA’s building and location requirements.

For more information about leasing your property to DHA, visit https://www.dha.gov.au/rentdirect.

Disclaimer
*Rent may be subject to abatement under certain circumstances such as loss of enjoyment or amenity, or breach of lease terms. Rent is paid where the property is habitable

Should a property become uninhabitable during the term of the lease, or lessor breaches the lease terms, the rent may cease or abate and the lease may be terminated by DHA.

Guaranteed rent is subject to the terms of the lease. DHA does not take into account an investor’s objectives or financial needs. Investors should always seek appropriate independent advice before making any investment decisions with DHA.
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Defence Housing Australia

Defence Housing Australia (DHA) was established in 1988 to provide housing and related services to Defence members and their families. DHA is active in residential housing and investment markets, and is one of the largest property managers in Australia, with approximately 18,500 properties under management.

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