One of the biggest property management companies in Australia is not a traditional real estate business. Defence Housing Australia (DHA) manages around 18,000 residences throughout Australia that some very special tenants call home. We talked to DHA Chief Operating Officer, Peter Howman, about how this verydifferent property management business operates.
Firstly, tell us a little about DHA?
The primary purpose of DHA is to supply housing and related services to Australian Defence Force (ADF) members and their families in line with supply agreements and the requirements of the Department of Defence. In fulfilling this role, DHA makes a significant contribution to Defence recruitment and retention goals. As a Commonwealth Government Business Enterprise, all activities are undertaken in accordance with Australian Government policy, and sound commercial practice.
Since its inception in 1988, DHA has been the sole provider of houses to Defence and has been responsible for the maintenance of these properties on behalf of their owners – Defence, DHA and private investors. In addition, since 2001, DHA has been responsible for the allocation of Defence housing stock for ADF members and management of their tenancies. These functions (supply of the portfolio, property maintenance, allocations and tenancy management) are inter-related and DHA derives important economies of scale by delivering them as a package.
DHA’s property investment offering is attractive to investors because it is one of the most secure products available in Australia. Investors benefit from DHA’s property expertise, as well as the security and certainty of DHA’s Lease Agreement. Investors also do nothave to worry about tenanting obligations throughout the lease term,as their rental income is backed by the Australian Government. Another great feature is DHA Property Care; a comprehensive range of property related services DHA undertakes on behalf of the investor throughout the lease term.
DHA undertakes a range of activities to attract new investors, including mass media advertising and seminars. A large percentage of business is derived from referrals and repeat sales.
How many properties do you manage, where are they located?
DHA manages around 18,000 residences, representing around $8 billion worth of housing stock. Over 65% of this stock is owned by private investors and leased back to DHA, who manage it throughout the lease term.DHA managed properties are located in most capital cities and major regional centres throughout Australia where the Australian Defence Force (ADF) has a presence.The majority of houses for Defence members are located Sydney, Brisbane/Ipswich, Townsville, Canberra, and Darwin.
Most residences are integrated throughout the local community, within close proximity to ADF establishments. Some are located on Defence bases.
What standards do you look for in housing for defence personnel? DHA’s contractual and service agreements with Defence set out property standards. Generally, this pertains to location, housing type and age, and amenity and inclusions.
Location – Housing must be in close proximity to Defence establishments; generally within 30km.
Type and age – Because DHA’s focus is Defence families, most of our managed portfolio are freestanding houses. On occasion, townhouses or some apartments may also be suitable. The majority of properties have been recently constructed; however there are exceptions to this where market pressures such as locality are present.
Amenities and inclusions – DHA properties are designed to meet stringent Defence requirements in terms of size, amenity and inclusions. At the time of construction, DHA also ensures properties comply with national building industry codes and standards, and related state or territory regulation.
DHA houses generally include:
- three or four bedrooms
- lounge room and dining room or meals area
- main bathroom, toilet, and laundry
- ensuite (accessible from the main bedroom)
- floor and window coverings
- heating and/or air-conditioning
- security screens and doors
- double garage
- a covered outdoor entertaining area, and
- landscaping (to suit the local area).
- Larger houses may also include a family or rumpus room and additional bedrooms or a study.
How many property managers do you employ?
The number of property managers DHA employs varies by region (based on the number of properties under management), and seasonality (the timing of the ADF member posting cycles which are from October to February).
In addition, property management functions undertaken in conventional real estate agencies (for example, inspections, reporting, repairs, and maintenance) are typically performed by numerous staff members, not just property managers.
What specific challenges do you have in your property management business and how do you overcome them? ADF personnel are transient, with a standard postal cycle lasting approximately three years. Defence determine the number and location of housing required each financial year. This creates an ongoing challenge to ensure supply meets demand in each location.
To manage this, Defence forecasts how many ADF members are expected to need housing in the next financial year (and the following four years) in terms of numbers, locations, and housing classifications. DHA responds with draft provisioning plans, taking account of supply-side factors such as expected vacancy rates, land supply, availability of capital and the state of the private rental market.
DHA aims to supply 85% of the Defence requirements as a national average, with the balance satisfied by ADF members receiving an allowance to rent through the private market.In addition, DHA must ensure future supply of housing in line with Department of Defence forecasting. For example, recently as the number of ADF members has increased, the requirement for properties has also increased.
How do you collect rent on such a large scale, how do you handle arrears?
Unlike a conventional real estate business, DHA does not collect rent from ADF members. Instead, funds are paid to DHA from Defence; effectively as a fee for the provision of housing services.
How do you use technology in your business?
DHA has developed several highly integrated IT systems to support and manage the diverse and varied aspects of its business. Our systems are crucial to the delivery of services – property management, leasing operations, customer relationship management, staff training and development. They enable and support thousands of interactions every week with ADF members as tenants, and with builders, contractors, lessors, valuers, staff, and Government. The integration of these systems assists DHA staff to spend more time interacting with the client and less time undertaking administrative duties.
A flagship online housing tool is called Homefind. This system enables ADF members to view (with photos, maps, floor plans etc. the housing available to them, at their rank-based entitlement, at the time they intend to move into a posting locality. The members may then browse and select the house of their choice. This triggers a number of processes (for example, vacancy inspections, programmed and responsive maintenance, plus more) for our property managers.
This financial year, DHA is launching an online tool for lessors (i.e. owners of DHA properties). The secure website will provide lessors with access to information about their DHA property portfolio and related transactions. Lessors will be able to view, download, and print their rent statements via this system.
What about learning and development for your property managers and other employees?
DHA has a dedicated learning and development strategy for its employees. Learning and development initiatives are customised to the needs of individual staff or groups, encouraging them to set and achieve personal and collective goals.
DHA property managers receive training specific to organisational needs (for example, operational processes, IT systems, customer service, etc.) This enables them to better manage DHA properties, undertake the business processes pertaining to them, and maintain sound relationships with customers. DHA utilises a combination of internal and external training providers to achieve this.
Where are your offices located in relation to the properties that you manage?
DHA has local offices, called Housing Management Centres (HMCs) across Australia to provide effective support to ADF members and their family.
HMCs offer dedicated staff, case management, and a personal touch throughout the tenancy life cycle. At the end of a tenancy, DHA property managers assist members in the vacation process. The HMCs also provides a continuity of service between tenancies.
DHA housing consultants are skilled in HomeFind, our online housing tool, and can also administer and provide advice on Defence policy or other housing entitlements. They help members and their family with any concerns they may have related to their housing experience.
What are some of your customer service challenges?
DHA has a very strong commitment to customer service and is a member of the Customer Service Institute of Australia. Due to the often-stressful nature of moving house regularly, DHA recognises that a personal level of case management is critical when communicating with ADF families.
ADF personnel are transient, with a standard postal cycle lasting approximately three years. DHA experiences an influx of posting annually between October and February, with the bulk of moves taking place in mid-January. During this period, DHA can process between 10,000 and 15,000 posting orders.
In order to manage a successful peak posting, DHA makes early contact with posted members, obtaining details of their movements. This enables DHA to provide early notification to the relevant areas of the business and commence property management processes. This pro-activity means more properties on HomeFind, leading to greater choice and ultimately customer satisfaction.