Headleasing guidelines

1. Introduction

The Homes NSW headlease program is designed to provide housing solutions to clients with specific housing needs, particularly in locations where Homes NSW has insufficient stock to support the needs of 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 Homes NSW 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 Homes NSW 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 Homes NSW 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 Homes NSW 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 Homes NSW to have:

• one lease between Homes NSW and the landlord or real estate agent, and
• another lease between Homes NSW and the tenant.

3.2 The headlease process

By the time the lease to a headlease property is signed, Homes NSW has already undertaken a series of steps and approvals to both identify a suitable property and match the property to a suitable client.

The process involves the following general stages:

1. The first step requires establishing a specific need for a client before any properties are considered. When Homes NSW 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, a request to acquire a headlease is made and approved by a  Homes NSW senior staff member.
2. 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 Homes NSW will commence the search and conduct inspections on properties that are identified as meeting the housing requirements of the client.
3. 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 is generally done quickly. Once approval is obtained, bond and advance rent is paid, and the lease is signed by a Homes NSW representative who is authorised to act on behalf of the Land and Housing Corporation who are the signatories to the lease.
4. 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 may be extended provided that the need continues, and the landlord is willing. At times the lease period negotiated with the landlord may also be less than 3 years. 

3.3 The lease

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

When a client is housed in a headleased property, Homes NSW 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 Homes NSW 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. 

The landlord must ensure that:

• the property is in a clean state and fit for habitation at the time the lease commences
• the property is in reasonable state of repair
• any repairs required during the lease are completed in a timely manner
• emergency after hour contact details are provided for urgent repairs.

Homes NSW must ensure that:

• the property is kept clean
• the landlord is informed about any damage or disrepair as soon as possible
• the property is kept as near as possible to the condition it was in at the start of the tenancy, except for fair wear and tear
• the tenant does not add or remove any fixtures or make any renovations or alterations to the property without the landlord’s written consent (unless permitted under the tenancy agreement).

3.5 Code of conduct

Homes NSW staff operate under a code of conduct when dealing with commercial arrangements requiring expenditure of Government funds. If a landlord or real estate agent has any concerns about the conduct displayed by a Homes NSW staff member, they should immediately contact the Executive District Director in that area. 

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

Local office contact details can be found by calling the Homes NSW Housing Response Centre on 1800 422 322.

4. Types of properties

Homes NSW has a continued need for both cottage and apartment type properties. The standard and condition of headlease accommodation should be suitable for rental purposes and meet the tenant’s housing need. 

Properties must:

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

Other favourable requirements include:

• properties that don’t need above average maintenance or regular upkeep
• properties that don’t have above average finishes that could be considered a significant maintenance liability
• properties with no obvious visible danger, such as trip hazards
• properties 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 repairing and maintaining 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 to ensure repairs are carried out, especially when urgent in nature. 

Homes NSW 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. Homes NSW 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 to a headlease property are required during the lease period, tenants can contact the Maintenance Hub. The Maintenance Hub will assess the request to determine what is required and make contact with either the landlord, real estate agent or nominated emergency contact to make the request on behalf of the tenant or pass on the request to the local Homes NSW 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, Homes NSW may carry out urgent repairs and request reimbursement from the landlord.

Urgent repairs may include:

• a burst water service or 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
• a faulty smoke alarm.

5.4 Damage

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

5.4.1 Compensation for damage

Generally, Homes NSW does not directly engage contractors and tradespeople to complete repairs to properties. They prefer to source quotations though the landlord or real estate agent. This allows landlords to use tradespeople that they are comfortable engaging with to carry out the work on their property. It also allows landlords to specify their requirements 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 damaged component.

5.4.2 Compensation process

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

For Homes NSW to make payment for damages caused, several steps must be undertaken to ensure the process is transparent and the necessary approvals are in place. 

The process entails the following steps:

1. identification and acceptance of damage to the property
2. agreement with the landlord or managing agent on what works will be undertaken
3. quotations being provided to Homes NSW by the landlord or real estate agent for the agreed works within 3 weeks from the date of request
4. quote assessment and approval by Homes NSW. This process takes approximately 10 working days  
5. payment of quote for works to start
6. follow up by Homes NSW 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.

5.4.4 Quotation approval

Homes NSW undertakes an internal approval process for all quotations for repair work to headlease properties. This ensures staff with the appropriate delegation can assess the quote’s 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. Additional time may be required depending on the complexity and value of the quote. 

There may be some occasions where negotiations are required to discuss work details or work values. These take place between Homes NSW 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.