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DHA EXPLAINED - PROS AND CONS

DEFENCE HOUSING AUSTRALIA (DHA) EXPLAINED - PROS AND CONS

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To decide whether Defence Housing Australia (DHA) is right for you, you first need to understand how the investment model works, then weigh the pros and cons against your own goals and circumstances.

Key Takeaways

  • Defence Housing Australia (DHA) uses a sale-and-leaseback model where investors buy approved properties and lease them back to DHA.
  • The main appeal of defence housing investment is predictable rental income, longer lease terms, and a more hands-off experience than a standard rental.
  • The main drawbacks are higher management fees, reduced flexibility, and limited choice over location and timing.
  • DHA properties are generally selected based on Defence housing demand, not purely on the best capital growth strategy for investors.
  • While DHA can suit some risk-averse investors, it is not automatically the best property investment option for everyone.

What is Defence Housing Australia (DHA)?

Defence Housing Australia (DHA) is a federal government-backed scheme that has been self-funded since 1988 and continues to generate revenues of more than $1 billion per annum.

DHA’s goal is to provide housing to members of the ADF and their families. That’s why DHA typically sells and leases housing within 30km of military bases. These properties are not aimed at owner-occupiers as the properties come with long leases with assured rentals. 

For investors, DHA is best known for its property investment model, where selected homes are sold to investors and then leased back to DHA for Defence housing use.

This means DHA investment properties are not the same as buying a standard rental on the open market and finding your own tenant. Instead, the property sits within a structured lease arrangement, with DHA handling tenancy and day-to-day property management under the terms of that agreement.

For many buyers, that structure is the main attraction. For others, it is the main limitation. That is why understanding the detail matters.

How a DHA investment differs from a normal rental

With a normal investment property, you usually choose the suburb, buy on your own terms, appoint a property manager, set your leasing strategy, and carry the usual risks around vacancy, tenant turnover, and management quality.

With a DHA property, much of that is structured for you. DHA becomes the tenant under the lease arrangement, manages the property, and handles many of the day-to-day tenancy responsibilities. In return, you generally pay higher service fees and accept less flexibility over how the property is used, sold, or repositioned during the lease period.

In simple terms, a DHA investment offers more certainty, but less control.

What's the process of DHA?

The process involves DHA building or acquiring property and then selling it to an investor at market value. The investor then leases the property back to DHA for between nine and 12 years, with options for extension while being paid market rent. You’ll need to register with DHA and obtain finance pre-approval, so you can get to select properties released for sale.

Properties with a DHA lease in place have become exceedingly popular, so much so that prospective buyers are required to go through a ballot system just to secure a property. Once you’ve completed the first steps, such as obtaining finance and selecting a DHA property – your consultant will enter you into the fortnightly ballot. 

If you have been successful in the ballot, the DHA property will be placed on hold for seven days. A small number of those properties are occasionally made available to buy outside of the ballot system. They’re marked as ‘buy now’ and are available for immediate purchase. This creates a fair system so that anyone interested in a DHA property has an equal opportunity to do so.

The general requirements for DHA to consider properties are that they must be within close proximity to a military base (within 30km or less) with a minimum of two bedrooms with built-in wardrobes. 

Is defence housing worth it?

Defence housing can be worth it for investors who prioritise stability, longer lease terms, and a more hands-off ownership experience. It can be less attractive for investors who want stronger control over location, lower management costs, faster value-add opportunities, or easier resale to owner-occupiers.

Whether DHA is a good investment depends on your goals. If your priority is certainty and simplicity, it may suit you. If your priority is maximising flexibility, negotiating well in the open market, and targeting suburbs purely for capital growth, a standard investment property may be the better fit.

Ballot vs ‘Buy Now’: what to expect

Because DHA properties can be popular, the ballot process is designed to keep things fair. In practice, that means your preparation matters: finance pre-approval, quick decision-making, and being clear on your preferred locations and property type before you enter the ballot.

If you’re successful, the property is typically held for a short period (e.g. seven days as outlined on this page) to allow you to move through the next steps. Occasionally, ‘Buy Now’ listings appear outside the ballot process, but they can require faster action.

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Pros and Cons of Investing in DHA

PROS Of Investing In DHA

Pro: Independent evaluations

To keep aligned with the terms of your lease, DHA will conduct independent rent reviews annually by a licensed valuer. They will provide ongoing recommendations on whether you should increase, decrease or maintain the level of rent.

Pro: Guaranteed rent

You sign an agreement with DHA as your tenant. This means you’ll receive guaranteed rental income for the term of the lease and no vacancy risk – even if the property is without a tenant, the government will cover you. Considering most DHA properties on offer are built new, it ensures the age of the average housing inventory is relatively low.

Pro: Never face the risk of no tenants

The lease terms are also much longer with DHA – ranging from 3-6 years or 9-12 years. For comparison, typical investment properties usually experience an average of at least 1-2 weeks vacancy a year, with the national rate currently held at 1.6%. 

Pro: Ensure you pick a premium home

The common misconception is that DHA properties are in non-so-desirable locations, thus limiting capital gains potential in the future. This is not true – with The Australian Financial Review highlighting that DHA has managed properties in capital cities AND award-winning developments. 

Pro: They will manage everything for you

This is great for “buy and forget” attitudes in the investment game. When you purchase an investment property from DHA, you lease it back to them. A huge attraction is the idea of NO management responsibilities. They will even refurbish the property when tenants move on – an appealing offer for risk-averse people. 

CONS Of Investing In DHA

Con: You are geographically limited to where you can buy

It’s not necessarily a deal-breaker, but the locations of DHA properties are usually restricted to military bases within 30km to provide homes for ADF members and their families. So if you have your heart set on a particular area, there’s no guarantee that properties will be available in your desired location.

Note: This often means they could be located in regional areas rather than high growth capital cities. If you pick in a low-growth or declining area, you could limit the potential capital appreciation in that location when it comes time to sell.

Con: There are some extra costs involved

DHA will deduct a 16.5% service fee on the rental income per annum (13% for townhouses and units) for managing and maintaining your property. This compares to the average 4-10% annual fee charges under typical property management – more than double. 

If not planned and budgeted for correctly, all your investment profits could go down the drain, and as with any fees, the fees could significantly reduce your return. 

As the homeowner, you will be responsible for outgoing costs such as council and water rates (usage reimbursed), strata rates, land tax, insurance, termite inspections and some repairs and maintenance.

Con: Limited appeal JUST to investors

Since the scheme is based on sale and leaseback, DHA will restrict the sale of properties if a rental agreement is still in place, meaning it eliminates owner-occupiers as buyers. In short, your only potential buyers will be investors who think DHA properties are a good bet since owner-occupiers comprise around 70% of the real estate market in Australia, the leaseback agreement attached to the scheme rules out that entire segment. 

Con: What you see is what you get

DHA properties are always sold at market value. The price is fixed and non-negotiable, meaning you may not see the maximum value if you sell mid-lease; you also can’t negotiate lower when you buy.

Download the Pros & Cons of Investing in Defence Housing

DHA vs standard investment property (quick comparison)

 DHA Standard investment property
Tenant / vacancy riskDHA lease with guaranteed rentDepends on market + property management
Lease lengthLonger lease terms (as outlined on this page)Typically shorter leases
FeesHigher service fees (e.g. 16.5% noted on this page)Usually lower management fees
Location choiceOften limited to areas near basesFull choice based on strategy
Resale flexibilityMore limited during the lease periodTypically broader buyer pool
Pros & Cons of DHA

Is DHA Investing The Best Option For You?

Investing in DHA can be considered a “safe” investment with little legwork and a long-term guaranteed income. However, given the high management fees, the lack of strategy behind the location and the inflexibility of the investment, we strongly believe that investors can find far better deals, with much lower risk. 

Depending on your personal and financial circumstances, there is a range of options available for you to choose from. As an ADF member, several benefits, entitlements, subsidies, and grants are available, including DHOAS, which can play an important role in your overall property strategy depending on your eligibility and subsidy tier.

The answer to whether DHA is a suitable investment will depend on you. Before you decide to invest, make sure you do your due diligence, think through your decisions and educate yourself to kick things off the right way successfully. 

Here at Axon, we educate, coach and mentor you to invest in property and help you set yourself up for a lifetime of investment success.

Click below to watch our free video training webinar to get started today!

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Frequently Asked Questions

What is Defence Housing Australia (DHA)?

Defence Housing Australia (DHA) is a government agency that provides housing and related services to Australian Defence Force members and their families. DHA manages a portfolio of properties across Australia, offering secure accommodation solutions for Defence personnel.

Investing in DHA properties involves purchasing a property leased to DHA. DHA then manages the property, renting it out to Defence personnel, ensuring a consistent rental income and managing tenant-related issues.

Benefits of investing in Defence Housing properties include guaranteed rent, reduced tenant risk, professional property management by DHA, and the stability of long-term leases

Drawbacks include higher management fees, geographical limitations on property locations, and limited appeal in the resale market, often only to other investors.

DHA manages all aspects of the property, including maintenance, repairs, and tenant issues, providing a hassle-free investment experience for property owners.

Lease terms for DHA properties typically range from 3 to 12 years, offering long-term rental stability and peace of mind for investors.

To start investing in DHA properties, research available listings on the DHA website or contact a specialised real estate agent familiar with Defence Housing investments.

DHA properties are considered a good long-term investment due to their stable rental income, low vacancy rates, and the security provided by government-backed leases.

Fees associated with DHA property investments include management fees (up to 16.5% of the rent) and higher maintenance costs compared to typical rental properties.

DHA guarantees rental income regardless of occupancy, providing financial security for investors through government-backed rental agreements.

DHA offers safety and simplicity but not strategic growth. First-time investors who want long-term flexibility and stronger capital appreciation often achieve better outcomes through tailored land-and-build strategies in open-market locations.

Pros:

  • Guaranteed rent: DHA covers rent even when the property is vacant, providing reliable income.
  • Hands-off management: DHA handles tenants, maintenance, and refurbishments, ideal for new investors who prefer simplicity.
  • Long-term security: Lease terms of 9–12 years reduce uncertainty and suit those wanting low-risk stability.

Cons:

  • High management fees: The 16.5% service charge can significantly reduce your net return.
  • Limited growth potential: Properties are often located near bases, which may not align with high-growth markets.
  • Restricted flexibility: You can’t live in, modify, or easily sell the property during the lease, limiting your control.

Investors who value consistency, hands-off management, and predictable income often find DHA appealing. It’s best suited for those with lower risk tolerance or limited time to self-manage.

ADF members wanting to build a high-performing property portfolio or access equity quickly may find DHA restrictive. Limited resale options and capped rent reviews can reduce growth potential compared to standard investment properties.

Yields typically sit around 4%–5%, depending on location and lease terms. While consistent, these returns are often lower than what can be achieved with new land and build opportunities in strong growth corridors.

DHA’s management fee is around 16.5% of rent—significantly higher than the 6–9% charged by private managers. This covers maintenance and rent guarantees but eats into overall returns.

DHA properties are still eligible for standard investment deductions such as interest, depreciation, and expenses. However, higher management fees can offset some of the tax advantages.

DHA homes are usually priced at a premium compared to nearby equivalent properties. Buyers often pay for the guaranteed rent and long lease security, which may limit initial equity and future growth.

Yes, but the property must be sold with the DHA lease in place, limiting your pool of potential buyers. Once the lease expires, the property can be sold freely on the open market.

Generally, yes. Because they can only be sold to other investors while under lease, resale timelines and demand are often lower. Open-market properties usually offer greater liquidity and flexibility.

Yes. Like any investment property, DHA homes can be negatively geared if the rent doesn’t cover costs. However, higher management fees and limited growth potential can reduce the overall benefit.

Many ADF members explore brand-new land and build investments in high-demand areas.

Common alternatives include:

  • Land and build in growth corridors: Allows you to choose the location, builder, and design to maximise value and long-term returns.
  • House and land packages in master-planned estates: Typically attract quality tenants and offer higher capital growth potential.
  • Dual-income or duplex builds: Increase cash flow with two rental incomes under one roof.
  • Using ADF entitlements strategically: Combining HPAS, HPSEA, and DHOAS can help reduce upfront costs and create a more flexible long-term investment path.

DHA properties are governed by specific rules that protect the Defence housing supply but limit investor flexibility.

Key restrictions include:

  • Owner-occupancy: You cannot live in or use the property yourself while the DHA lease is active.
  • Modifications: Any structural changes, renovations, or upgrades must be approved by DHA.
  • Selling the property: During the lease, the property can only be sold to another investor willing to take on the existing DHA lease. Owner-occupiers can’t buy until the lease ends.
  • Access: Landlords have limited physical access to the property during the lease term. DHA manages all inspections, maintenance, and tenant communication.
  • Pricing: DHA homes are sold at a fixed market value, there’s no room for negotiation when buying or selling mid-lease.
  • Ongoing obligations: You still pay council rates, insurance, strata (if applicable), and land tax, even though DHA handles the tenants and routine upkeep.

Yes, DHA guarantees rent even during vacancies or tenant changes. However, that guarantee is factored into the management fee and property price, so while reliable, it’s not cost-free.

The key fee is the 16.5% management charge, covering rent guarantee, inspections, and maintenance coordination.

What’s not included:

  • Council and water rates (usage is reimbursed).
  • Strata levies (for apartments or townhouses).
  • Insurance (building, landlord, and contents where required).
  • Land tax and some maintenance costs, such as structural repairs, termite treatment, or upgrades beyond the DHA scope.