Property provisioning

Provisioning schedule

The provisioning schedule is drafted in response to the Defence Housing Forecast and takes into account factors such as vacancy rates, lease-ends, land supply, availability of capital and the state of private rental markets. Following negotiation, DHA is contracted to supply an agreed level of housing through an approved provisioning schedule. Generally, 85% of the Defence housing requirement is supplied. The balance is satisfied by private rentals and DHA manages the payment of rental allowances to members. In 2013–14, DHA was contracted to supply 17,590 dwellings that, after allowing for vacancies, would accommodate 15,921 Defence families. A further 3,485 members were expected to be accommodated in the private rental market.

Capital program

The capital program sets out how DHA's housing obligations to Defence, as agreed in the provisioning schedule, will be met. It takes into account expiring leases, lease extensions and renewals, direct leasing outcomes, the purchase of new properties and land acquisition and construction programs. The result is a large residential development, construction, acquisition, leasing and disposal program that must be approved by the Board. A summary of major developments in the 2013–14 capital program is at the end of this chapter.

In the 2013–14 capital program for Defence families, 662 new dwellings were constructed and purchased at a cost of $318.9 million. Two hundred and two properties were leased directly from private investors and 396 leases were renewed on existing properties where leases and options had expired. As at 30 June 2014 a portfolio of 17,590 properties was provided, which exceeded the KPI of 98.5% for housing provisioning.

During 2013–14, the MCA portfolio acquired 120 properties and directly leased 62 properties from private investors. As at 30 June 2014 a total portfolio of 425 properties was provisioned, exceeding the Corporate Plan target of 421. MCA now has national coverage.

Leasing programs

As with construction and acquisitions, leased properties must meet Defence standards while offering the added advantage of flexible lease terms for lessors and managing risk for DHA.

In 2013–14, the strategic focus was on:

• leasing properties in desirable locations that would otherwise be difficult to acquire
• re-structuring lessor management to incorporate Defence and lessor customer service across the business and
• the ongoing expansion of the MCA program.

This approach resulted in the target of 1,522 lease additions for Defence families being exceeded. This target was achieved through the successful negotiation of new lease agreements with lessors, long-term extensions before current leases expired and the right to vary leases by extending or reducing the terms. Targets in previously challenging locations for provisioning, such as Rockingham, Liverpool and Sydney, were achieved in 2013–14. In Sydney, 26 apartments for Defence members were leased in Drummoyne, only six kilometres from the Sydney CBD.

The net leasing outcome (the difference between properties removed at end-of-lease and properties added through the leasing program) for 2013–14 was achieved, with approximately 140 extra properties retained in the portfolio.

To ensure the success of the leasing program, a focus on improvements to policies and procedures (previously the Leasing4U project) continued. This included a collaborative approach across the regions to ensure a solid foundation for future growth.

MCA leasing expanded in 2013–14. This was to facilitate the Defence member property portfolio growing to 1,000 dwellings by 2015–16. The MCA leasing program achieved 62 direct leases to expand the total MCA portfolio to 425.

Defence has indicated that, when the MCA portfolio reaches 1,000 dwellings, MCA and rent band choice properties will be interchangeable. This will give more flexibility in meeting the housing needs of Defence members.

Major land acquisitions

The acquisition of suitable, cost-effective land for Defence housing is an ongoing priority. As in previous years, DHA has responded to a general shortage of retail land in reasonable proximity to Defence bases and establishments by acquiring greenfield development sites. This continued in 2013–14 with several significant land purchases.These will ensure that sufficient, well-located and competitively priced land is available for the construction program in key locations for the medium-term.

Land acquisitions that took place in 2013–14 are listed in Table 1.

Table 1: Land acquisitions in 2013–14

State and Territory Government agreements

To help meet the housing needs for Defence members in major cities, an innovative approach has been taken to source land in prime locations. As part of an agreement with the Queensland Government, DHA has acquired land close to Gallipoli Barracks in Brisbane that will provide 49 units for Defence members. In turn, DHA is constructing 17 apartments for the Queensland Government.

Discussions are ongoing with State and Territory Governments and other organisations regarding access to land close to Defence bases.