Defence Housing- end of lease

[geoffw]

I've had a Defence Housing property for almost 12 years now. It was originally a 9 year lease, with a three year option, which was exercised.

That is due to expire in June.

I have had several phone calls over the last few months- but never anything in writing.

1. They want to renew for three more years- with the option of renewing for longer if I make a few capital improvements (like making the carport into a lockup garage). I asked for something in writing. I never received anything. The phone showed no caller id. I really have no confirmation of the contents of the call, which is why I asked for confirmations.

2. They want to renew for three more years- no more options.I asked for something in writing. I never received anything.

3. The civillian tenant wants to stay on. Do I wish to keep that tenant on? I asked for something in writing. I never received anything.

(I had had no idea that there was a civillian tenant. The property has been apparently managed by a local REA with DHA overseeing it).

The problem with a tenant staying on is that, under ther terms of a DHA lease, DHA is responsible for repainting inside and out, and recarperting, after 12 years. They are not able nor willing to do so with a tenant in place- fair enough.

4. I'm now told that DHA have no interest in keeping the property. And, in fact, when pushed, they told me that the rent which I am being paid is subsidised. DHA have been paying me around $500 pw. The civillian tenant has been paying me around $400. That rent has been paid for some period of time without rent review. Although enquiries have led me to understand that the rent being paid by the tenant is not too far below market value. (rentals have dropped in the suburb).

DHA charge me 15% management fee plus GST. A local REA might charge 8-10%. But without the maintenance support which DHA offers.

I'm not upset by DHA dumping the property. That was in the terms of the lease.

What does concern me is that they have contacted me several times, and offered several options. Nothing was ever put into writing.

This has happened over three months. My decisions about what to do with the property have been based on phone calls from an unverified caller with options which they want to take with the property- none of which eventuated.

This has postponed my decisions on this property for three months. The ideal time to have marketed this property would have been two months ago. With the guaranteed repaint and recarpet. And when the selling season in that subu8rb was higher.

Now, it has thrown a real spanner in the works.

I've been quite happy with DHA in the past.

But this has really put me off.

[rugrat]

I think you need to either put the time and effort in and chase them up yourself, or cut your losses and move on.

[Raddles]

Hi there Geoff
if they can't carpet and paint the property - how about they offer some of that management fee back to you. It is a breach of contract if they don't fulfill their side of the bargain.

You may still want to keep that property because the vacancies are still fairly tight in the ACT and the rental return is good - perhaps rethink a sale during the next boom?
thanks

[twobobsworth]

I was of the understanding that the repaint/recarpet could also be taken as a cash payment?

[DavidMc]

$500pw for a property that has a market rate of $400pw, plus not a day vacancy in 12 years?

It all sounds pretty good to me Geoff.

How has the growth been? Where is it located (regional NSW, outer burbs?) ?