Lessons of Defence Housing Australia for affordable housing provision

• Bronwyn Hanna, Peter Phibbs
• Australian Housing and Urban Research Institute (AHURI)

Read the full text

25 October 2010Encouraging private investment in affordable housing Australia has been recognised as a major challenge by researchers and policy-makers for some time and this has generated considerable work on possible models. One successful model of private investment in the large scale provision of rental housing has been that of Defence Housing Australia (DHA). In 2009, DHA had a portfolio of over 17,000 dwellings valued at over $7 billion that were owned by a mix of public, private individual and institutional investors. Essentially the DHA has a number of functions, it:

• constructs housing
• buys housing
• sells housing (to dispose of it)
• sells housing to investors (called non-DHA housing in this report) and leases it back on long-term leases
• manages tenancies
• maintains houses (including essential maintenance for its leaseback properties)
• refurbishes housing
• relocates tenants.

The non-DHA properties are managed by the DHA for fixed periods typically up to 12 years and are on-leased to service personnel. The financial and operational parameters of this model has many features in common with intended directions for affordable housing signalled under recent national and state policies—especially plans to promote private ownership of affordable housing and to encourage larger scale housing managers, with a focus on the potential of the not-for-profit housing sector.

The aim of the project is very straightforward: ‘to determine the potential lessons of the DHA model for affordable housing provision’.

To address this aim, the study will consider the following specific research questions:

1. What are the characteristics of the rental housing investment and business models operated by the DHA and how have these developed and performed across market cycles?
2. What benchmarks can be established for key performance areas including returns to investors and asset and tenancy management?
3. What implications can be drawn from the DHA model for the emerging affordable rental housing sector?