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Is Defence Housing in breach of contract?

Discussion in 'Legal Issues' started by Rocko, 18th Mar, 2016.

  1. Rocko

    Rocko Member

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    Hi all,
    I lease property to Defence Housing (DHA) and generally have been happy with them.
    However, each year DHA is required to provide me with a market rental valuation, by an independent valuer, determining the rent as at 31 December. The rent is then adjusted accordingly.
    If I am dissatisfied with the valuation I have the option to engage my own valuer and present that valuation to DHA. Then the two valuers negotiate to come up with an agreeable figure.
    Each year when I receive DHA's valuation I make inquiries of local agents as to their opinion. Often DHA's valuation is below market value and I then have to obtain my own valuation.
    Both valuers are required to do their valuations 'as at 31 December'. However, because DHA has thousands of properties they do their valuations months earlier, eg, September, October. They then issue the valuations after 31 December, in early January.
    On the other hand my valuations are always more recent, as they are done in January.
    Sometimes the comparable rents that DHA have used are for properties that were rented out months before their valuations were done, eg, In winter when it may have been a different market. DHA claim that they take this into account, although I've seen no indication that they do. So DHA can be relying on market data that is half a year old, possibly older.
    Is DHA in breach of contract by providing 'as at 31 December' valuations that were created months before 31 December?
    Thanks for any opinions.
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    I'm not sure if they are in breach.
    If they are how would they remedy that breach?

    What do you want?
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Not a breach - the valuer signs off on the valuation and it is their professional opinion & indemnity insurance at stake.
     
    Terry_w likes this.
  4. Rocko

    Rocko Member

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    I think it would be more accurate if their valuations were done after 31 December. As it stands DHA's valuers are basically guessing what the future market will do.
    .... not to mention the thousands I have had to spent on valuations so as to maintain market rent.
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    How different have their valuations been to ones you've arranged?

    What does the contract say about the process, the dispute remedy and the avenue for these disputes?
     
    Propertunity likes this.
  6. Rocko

    Rocko Member

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    The difference at the last review was $70 pw for one property and $35 for the other = over $5,000 in gross rental income p.a. DHA agreed that my valuations were accurate.
    I haven't looked at the contract at this stage.
     
  7. Chilliblue

    Chilliblue Well-Known Member

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    If the contract states the rent as of 31st December then you would have a case but what you have supplied above then is room for dispute.

    DHA have been around for years and know how to play the system.
     
  8. sanj

    sanj Well-Known Member

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    Your first step to work out whether any contract is being breached is to read the contract...
     
    Terry_w likes this.
  9. Azazel

    Azazel Well-Known Member

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    Or pay someone who knows what they're looking at to read it for you.
    You could always post it on a forum of course...
     
  10. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    You are qualified to dispute each valuation each year? Take them on. You might want to review the purchase price too. Wo beleives annual valuations?

    A valuation based on military staff on a guranteed annual gurantee over 5 tom8 years will be less than any agent guestimate
     
  11. JDM

    JDM Well-Known Member

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    This will all depend on the wording of your contract but I doubt it would amount to a breach. You have a right to review their valuation and that is what you're doing so seems like the situation is unfolding as contemplated by the contract. I understand it must be annoying but I don't think there is much legal recourse beyond what you are doing (unless the contract provides something further).
     
  12. Rocko

    Rocko Member

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    It is certainly annoying, JDM. This year I had to go through the process to obtain over $5,000 worth of additional gross rental income, which I was entitled to. Do any other DHA owners have a similar experience?
     
  13. Chilliblue

    Chilliblue Well-Known Member

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    @Azazel The ones that I have read only state that the valuation is required BY a fixed annual date and not a valuation FOR a certain date.

    DHA are a slick organisation with thousands of properties. They would not be adding any clauses into a contract that would incur more work or go against them.
     
  14. dabbler

    dabbler Well-Known Member

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    When I read this, I think of who has the biggest war chest if it gets to litigation........

    I also think the problem would be with thinking DHA is going to be same a private rental, your already behind when I looked at it many years ago.