I have two Defense Housing Authority (DHA) properties. One in Brisbane and one in Adelaide.
Every year on 31 December, the DHA does an evaluation to determine the new rent. I look forward to the this rental review, because it usually means a nice rental increase. But the last two Christmas reviews have been underwhelming and a bit disconcerting.
For instance, last December – 2009 – was a letdown; the rental valuations came in marginally lower. I was down about $10 a week on both properties. This was not exciting.
Yes, it was a difficult year; the global financial crisis (GFC as it’s so affectionately called) sticking its claws into everything.
But, Australian housing prices in 2009 took a sharp turn upwards. While the rest of the world seemed to be experiencing housing price drops, many parts of Australia were showing tremendous growth.
As such, I was expecting rents to rise as well. After all, as house prices rise, they become less affordable and therefore renting becomes a more attractive option for many people.
To mitigate this backward slide in rent, I made some inquiries and determined the rent review for the house in Brisbane was alright, but the one in Adelaide appeared low. So, I went through the secondary rental review process and paid for another rental review. About $300 later, I received a rental evaluation that came in $20 higher than the DHA figure. The DHA agreed and put the rent up $20 a week retroactively.
I was happy with this outcome for two reasons. First, the extra $20 a week would more than pay for the second rental evaluation. Next, I feel it’s important to keep my properties rented at market value; avoid having the rents slide behind. If rents slide too much below market, it’s difficult to bring the rent up – especially if you are dealing with the same tenant. Folks don’t like big jumps in rent.
And, how did the rent review go this year – December 2010? Was I having high expectations? Was I expecting a nice increase to offset last year’s “ho hum” result? May I answer with an emphatic, “YES!”
Why the high expectations? Well, first of all, look what happened to interest rates. They went up right? And, what happened to house prices? Did they go down? I don’t think so. What happens when interest rates go up and house prices either stay the same or go up? People stop buying. They look to renting. As such, I was expecting the market rent for these two properties to rise. But, I got another Christmas surprise.
The rent for the house in Brisbane stayed the same; $425 a week. And, the property in Adelaide … well it slid backwards by $10 a week; from $375 down to $365. I was amazed.
So, again this year I did some preliminary checking. First, I researched our Adelaide property. It’s located in Golden Grove, South Australia about 20 km north of the city. It’s a 4 bedroom, 2 car garage, 2 bathroom very well presented property. It has to be; DHA won’t rent it if it not up to their rigorous standard. My preliminary checking showed a contrast to the DHA evaluation. If you want to rent such a property in Golden Grove, you need to be prepared to pay about $$385 a week or more. Probably closer to $400 a week.
Based on this preliminary result, I decided again this year to have a secondary rental evaluation done for our Adelaide property.
I wasn’t so concerned about the Brisbane property but for completeness, I did a preliminary check as well. The results were enlightening; I’m glad I made this check.
Our Brisbane property is located in Enoggera which is about 8 km north of the city. Again, it’s a 4 bedroom, 2 bath, 2 car garage and well presented.
I was hard pressed to find any 4 bedroom properties in Enoggera for under $500 a week!
Guess what? I put this property up for a secondary rental evaluation as well! The DHA wants it for $425 a week, yet the market seems to say that’s way undervalued. Let’s get a second opinion. That’s what I say.
So, the process is underway. I’m awaiting the results of these secondary rental evaluation reviews. Hopefully, I’ll be pleasantly surprised; higher rents. But, what if the secondary review agrees with the DHA result? Then, I’m stuck with lower rent and two secondary rental evaluation bills; about $600. But, that’s ok. I feel there’s a reasonable chance that this could be a fruitful exersice.
I’ll let you know how it goes
Have you got a DHA property? How are you going with your annual rent reviews?
Click here for see what happens: “DHA Rent Review – Update.“