14 July 2017 What’s the catch? Debunking the rental guarantee myths

A quick search of the internet will deliver countless articles discussing the upsides and downsides of rental guarantees. And while it’s true that rental guarantees aren’t unique to DHA, it’s the structure and conditions of DHA’s rental guarantee that are1.  We spoke to DHA’s Director of Investor Sales, Chris Perry, to find out what sets DHA’s rental guarantee apart from the others.

‘Properties sold through DHA’s investment program are sold with a rental guarantee. This means for the length of the lease investors can take comfort knowing they’ll receive rent even if the property is vacant.

‘While other developers may offer rental guarantees, you’ll have a hard time finding one like DHA that will offer a long-term rental guarantee of 6 to 12 years’, said Chris.

Unlike other rental guarantees on offer, DHA do not fix the weekly rent for the lease period. Instead the rent on DHA properties is adjusted annually in line with a market valuation. DHA also offers a rental floor meaning the rent will never fall below the commencing rent2.

‘Each year we engage independent licensed valuers to assess each property’s rent and adjust it to either market rent or commencing rent, whichever is higher. This allows our investors to budget easily knowing the minimum rent they’ll receive each month’, said Chris.

So how is it DHA can offer investors this level of security. Is there a catch?

‘In my role I’ve had to debunk my fair share of myths around DHA’s investment product. We don’t price our properties at a premium to cover the rental guarantee, nor do we pay below market rent. Our agreement allows for investors to seek their own valuation if they disagree with the market valuation, we’re not hiding anything’, said Chris.

Digging a little deeper into the DHA story you’ll find that the catch is not really a catch at all. DHA are able to offer these lease conditions because of the long-term agreement they have in place with the Department of Defence to house members of the Australian Defence Force and their families.

‘It’s a unique arrangement that was put in place over twenty years ago to improve the quality of housing provided to Defence force members—and it benefits investors too,’ said Chris.

To find out more about the benefits of investing in a DHA property, register your interest today http://bit.ly/2oiWX7c

 

Attention: All information contained in this article is for general information only and prospective investors should seek independent advice. Investment is subject to DHA’s lease terms and conditions of sale. Investors retain some responsibilities and risks, i.e. rent, restoration and market fluctuations. See dha.gov.au/lookforward for relevant information. 1. Rent is subject to abatement in limited circumstances. 2. Rental floor applies to DHA properties leased under DHA’s Lease Edition 6C, which will not cover all DHA properties.

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