Headleasing Guidelines

1. Introduction

The Department of Communities and Justice (DCJ) Headlease program is designed to provide housing solutions to clients with specific housing needs, particularly in locations where DCJ has insufficient stock to support the needs of particular clients. The Headlease program plays a core role in the supply of social housing in NSW and its continued success is integral to ensuring housing outcomes are achieved.

The flexibility of the program provides an opportunity for landlords and real estate agents to enjoy a secure tenancy with DCJ which provides security in rental payments for the duration of the lease period and payment for any damage should it occur.

2. Purpose of these Guidelines

These Guidelines have been developed to assist both landlords and real estate agents to better understand the operational requirements when dealing with DCJ on matters relating to Headleasing. The Guidelines also set out to promote a consistent approach to managing the Headlease program and provide a level of understanding and expectation of what the program entails.

3. Headlease Program

3.1 How Headlease works

The term Headlease program refers to a program that enables DCJ to lease suitable residential properties in the private rental market and then sub-lease those properties to clients that have been approved for social housing in NSW.

The Headlease program provides DCJ with an opportunity to supplement the amount of Government owned housing. Factors such as demand exceeding the supply of housing stock in various locations, suitability of housing stock and the urgent nature of some housing needs all contribute to a need to Headlease properties.

A Headlease allows DCJ to have:

• one lease between DCJ and the landlord or real estate agent, and;
• another lease between DCJ and the tenant.

3.2 The Headlease process

By the time the lease to a Headlease property is signed, DCJ has already undertaken a series of steps and approvals in order to both identify a suitable property and match the property to a suitable client.

The process involves the following general stages:

• The first step requires establishing a specific need for a client before any properties are considered.  When DCJ identifies an urgent need to house a client and there are no suitable Government owned properties available, Headleasing is considered as one option to meet that need. If a Headlease option is viewed as the most suitable option then a request to acquire a Headlease is made and approved by senior staff member within DCJ.
• The next step involves the assessment and suitability of the request by Headlease staff and approval to proceed to locate a property. At this stage DCJ will commence the search and conduct inspections on properties that are identified as meeting the housing requirements of the client.
• The final stage in acquiring a Headlease after a suitable property is found, requires approval by a senior staff member to ensure funds for the entire lease period are allocated and that the property is suitable. At this stage the landlord or real estate agent will be kept updated as the approval process progresses, which generally is done quickly. Once approval is obtained, bond and advance rent is then paid and the lease is signed by a DCJ representative who is authorised to act on behalf of the Land & Housing Corporation who are the signatories to the lease.
• Once the lease term ends and if there is no further need  for the property or the landlord does not wish to renew the lease, the property is handed back.

Lease terms are generally 3 years and extended should the need continue and the landlord be willing. At times the lease period negotiated with the landlord may also be less than 3 years.

3.3 The Lease

The lease that the DCJ signs (on behalf of the Land & Housing Corporation) with the landlord or real estate agent will always contain a clause that allows DCJ to then sub-lease the property continually and unconditionally for the duration of the lease.

When a client is housed in a Headleased property DCJ will inform them about the implications of providing a home in this way, including that they:

• may have to relocate at the end of the lease term;
• may be charged the cost to repair any damage caused deliberately or negligently;
• will not be permitted to make any additions or alterations to the property without the landlord’s written consent;
• may not be able to keep pets if that is a condition in the lease between DCJ and the landlord;
• will need to adhere to any applicable bylaws.

3.4 Obligations

To help ensure all parties understand what is expected of them during the lease, there are some general obligations. These include:

3.5 Code of Conduct

DCJ staff operate under a code of conduct when dealing with commercial arrangements where Government funds are expended. Should a landlord or real estate agent have any concerns at any time with the conduct displayed by a DCJ staff member, they should immediately contact the Executive District Director in that area.

DCJ also have a Statement of Business Ethics to establish a mutual understanding of public obligations when DCJ is working with external parties.

Local office contact details can be found by visiting www.facs.nsw.gov.au/about/contact/housing or calling the DCJ Housing Contact Centre on 1800 422 322.

4. Types of properties

DCJ has a continued need for both cottage and apartment type dwellings that are of a standard and condition suitable for rental and meet the needs of the tenant.

Properties must have the following attributes:

• clean, safe with minimal maintenance requirements;
• meets current construction standards and be structurally sound;
• be free of any pests and vermin;
• be free of mould;
• have working smoke alarms installed in accordance with Australian standards and codes;
• residential strata buildings must be fitted with window safety devices ensuring the maximum window opening is limited to less than 12.5 cm;
• property is suitably fitted with locks and secured, and have;
• electrical safety switches be installed.

Other requirements considered favourably include:

• properties that do not appear to require above average maintenance or regular upkeep;
• properties that don’t have above average finishes that could be considered a significant maintenance liability;
• that no obvious dangers are visible, such as trip hazards;
• the property is close to schools, shops, public transport, medical facilities or other requirements that may arise.

5. Repairs and Maintenance

5.1 General information

It is expected that landlords are responsible for the repairing and maintaining of the leased property during the lease period. Landlords are required to ensure the property continues to be in a good state of repair and condition and to act within a reasonable period of time to ensure repairs are carried out especially when urgent in nature.

DCJ ensures tenants are made aware of their responsibility to keep the property undamaged and returned to the landlord in a similar condition to that when it was first leased less fair wear and tear. DCJ carries out as a minimum an annual inspection of each property which is aimed at assessing the needs of the tenant and ensuring the condition and upkeep of the property meets expectations.

5.2 Requesting repairs

Where repairs are required during the lease period to a Headlease property, tenants have the ability to directly contact the DCJ call centre. The call centre will then assess the request to establish what is required and either make contact with either the landlord, real estate agent or nominated emergency contact and make the request on behalf of the tenant, or pass on the request to the local DCJ Client Service Team should it require further investigation.

5.3 Urgent repairs

In rare circumstances where the landlord, real estate agent or emergency contact cannot be contacted after several attempts, DCJ may carry out the urgent repairs and request reimbursement from the landlord.

Such urgent repairs may include:

• a burst water service or a serious water service leak;
• a blocked or broken toilet;
• a serious roof leak;
• a gas leak;
• an electrical fault;
• flooding or serious flood damage;
• serious storm or fire damage;
• a failure or breakdown of the gas, electricity or water supply to the property;
• a failure or breakdown of the hot water service;
• a fault or damage which makes the property unsafe or insecure;
• faulty smoke alarm.

5.4 Damage

At the start of any lease, DCJ tenants are advised not to cause or allow any damage to the property during the lease, whether it be intentional or accidental. In circumstances where damage is caused and deemed not to be fair wear and tear, DCJ is responsible to the landlord for that damage.

5.4.1 Compensation for Damage

DCJ generally does not directly engage contractors and tradespeople for the purposes of conducting repairs to properties, and prefers to source quotations though the landlord or real estate agent. This allows landlords to use tradespeople that they are comfortable with engaging to carry out the work on their property. It also allows landlords to be specific in the works they require and choose finishes they are happy with. It is important to note that this is not an opportunity to renovate and quotes are only to repair or replace the component which has been damaged.

5.4.2 Compensation process

At the time DCJ becomes aware of any damage to a Headlease property, DCJ will investigate the damage immediately and will make contact with the landlord or real estate agent to inform them of such damage. Damage may be identified during the lease period or towards the end of the lease during handback.

In order for DCJ to make payment for damages caused a number of steps must be undertaken to ensure the process is transparent and the necessary approvals are in place.

The process generally entails the following steps:

• identification and acceptance of damage to the property;
• agreement with the landlord or managing agent on what works will be undertaken;
• quotations being provided to DCJ by the landlord or real estate agent for the agreed works within 3 weeks from the date of request;
• quote assessment and approval by DCJ. This process generally takes approximately 10 working days by DCJ;
• payment of quote for works to start;
• follow up by DCJ to ensure works have been completed.

5.4.3 Quotations

Upon agreement on what works will be undertaken, quotations are required for the works that have been agreed to.

DCJ requires the following in order to process quotations:

• that any request from DCJ for quotes be made in writing, be dated and clearly state the agreed works to be quoted for by the landlord or real estate agent. This ensures transparency and clarity of what has been discussed and agreed;
• that any quotation received by DCJ is detailed and clearly states what works will be performed and where on the premises. Property address must also be stated on the quotation;
• the quotations are itemised for the individual parcels of work and priced individually;
• the quote clearly states the GST component;
• three quotes be provided for works with a value of $5,000 or greater (where this is not possible it must be negotiated with and approved by a senior staff member within DCJ).

5.4.4 Quotation approval

DCJ undertakes an internal approval process for all quotations for repair work to Headlease properties. This ensures staff with the appropriate delegation are able to assess the quotes work detail and value. The approval process generally takes up to 10 working days and then payment is made electronically. The time required and level of approvals depends on the value of the quote and many quotes are processed under 10 days and at times additional time is required depending on the complexity and value.

At times there may be incidences where some negotiation is required on work detail and or work value and these take place between DCJ staff and the landlord or managing agent.

6. Further Information

The Headlease program is managed by local client service teams in your area. For further information on Headleasing and how you can become involved feel free to contact your local client service team or visit the DCJ web site at www.facs.nsw.gov.au.