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What happens at the end of a DHA lease?

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What happens at the end of a DHA lease?

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Aug 24, 2016
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What happens at the end of a Defence Housing Australia (DHA) lease? This is a question potential investors may want to clarify before making the choice to invest. Existing investors with a DHA leased property may have a lease expiry coming up and wondering what to expect.

Typically, DHA leases will run for 9 – 15 years, sometimes longer depending on negotiations with the owner. A second lease term may be entered into.

If a new lease can’t be negotiated or the property is no longer suitable, DHA will generally give the owner notice of its intent to hand the property back at the end of lease.

There are several editions of DHA’s lease, so it’s important to refer to specific version for the property you own or are considering purchasing. Generally, the following provisions are included as part of DHA’s restoration obligations to the owner:

  • professional cleaning of the interior
  • ensuring appliances are clean and in good condition
  • cleaning up of the surrounding grounds, including tidying of landscaping
  • new internal painting (leases longer than 6 years)
  • new internal/external painting (leases longer than 9 years)
  • replacing of carpet and/or floor coverings (leases longer than 9 years).

In the case of a strata titled property, the body corporate may retain responsibility for items considered common property. This could include the grounds and external painting.

Of course the investor will need to expect some reasonable wear and tear after tenant occupation of 9 – 15 years or longer when they take the property back.

Once an investor is aware that there is an upcoming end of lease, they can start to plan what they would like to do with the property after the lease ends. Investors are free to do as they wish with their property, the main options at the end of lease being:

  • Selling up – the property will be vacant, neat and tidy, so it’s an ideal opportunity to sell.
  • Renting out – investors wanting to keep the property longer may appoint a property manager to find a tenant on the open market and continue with the investment.
  • Moving in – sometimes this will be the plan from the start, for others the characteristics of the property may suit their needs and what was their investment becomes their new home.

If you’re looking to invest, make sure you register for our ‘New Property Alerts’ to be among the first to receive our latest investment opportunities, all with DHA lease advantages, plus receive our Investor News Blogs like this one, free. Register here.

If you’d like to learn more or you have a specific question, we’d love to hear from you. Drop me a line at jonathan@capitaldefencehomes.com.au or call 0421 040 082.

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Best wishes,

Jonathan Irwin – Director
Capital Defence Homes
www.capitaldefencehomes.com.au

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