Does Defense Housing (DHA) Make a Good Investment?

By Alex Henderson, Prosper Group



  • A guaranteed tenant for up to 12 years - so no vacancies
  • Often brand new properties - so good depreciation benefits
  • Repainted and recarpeted at the end of the lease (make good clause)

These benefits are positive, howeverinvestors shouldalways evaluate the fundamentals before rushing to buy a DHA investment, or any investment property for that matter.

Investors are often attracted to new DHA properties because of the depreciation benefits that come with them, effecting reducing the rate of tax they have to pay. In addition, having a secure tenant in place for 12 years and then having the property updated at the end of the lease term aregreat benefits.

Investors shouldalso consider these important factors:

  • Is the asking price at market value or has it been inflated to account for the long lease term? In addition, how does the asking price compare with other similar properties in the area that are only 2 to 3 years older? Is there a big difference in price?
  • Check the property management fees(they can be higher thanstandard management fees)
  • What is the housing supply like in the area? DHA properties can be in new estates where there are many properties for sale. This could and often does limit capital growth in the short- to medium-term whilst the supply is absorbed.

Like any niche property that is marketed to investors, it is important to consider the fundamentals of the investment. For example; if a family can buy a home a few streets away, that is only 2 to 3 years older that the DHA for $100,000 less, then capital growth of the DHA house may be somewhat limited over the first few years.

Also with DHA properties, it is compulsory to use their property managers at their set fee.

If you are looking to buy a residential property and require expert assistance to gain more advantages with your purchase, call Prosper Group now on 1300 664 373 or email us on enquiries@prospergroup.com.au