I used to work as a Property Manager, and to be honest, I personally would not lease any of our investment properties to DoH. Only because I have seen first hand what can happen. Of course, this is generalising DoH a lot, and I know there are some lovely tenants that rent through them. But as a whole, nope, wouldn't do it. You don't know who you're rent to. Whereas, with bro's friend, or any other tenant for that matter, the RE can do the proper checks on them, and you know (to a certain degree) who you are renting to. And if there are any problems with vacating, rent, etc, the RE deals with the tenants. Dealing with a Govt agency regarding this is a nightmare.
I have a rental property, about to sell it though But I would rent to Bro's friend through the agent.
Some DoH renters a great, really clean respectful, others not so much and as you can't control who you get I wouldn't rent it out to DoH, it is your investment and I wouldn't like to take the risk IYKWIM.
Goodluck
When my family moved to melbourne, mum bought a great flat in a great block. We lived there for 13 years (mum and little bro still do). Only downside; one of the flats was rented out to the DoH. I know not everyone in govt housing are bad people, but over the course of my 13 years living there, there is no way I would rent your flat out to them, sorry. We have had drug dealers, bashing, police there at all hours. Our property was stolen and damaged. The owners of the flats were the body corporate, we got new gates and a new driveway put in; gates were smashed by 'friends' of the people in the DoH flat. It all came to a head with some people going upstairs to a neighbours flat and bashing her son who was visiting from Japan, right in front of his wife and 6 week old baby. You will have no control over who comes and goes. I'd go with your bro's friend, as at least you will be able to have your bro visit and you will have that piece of mind. Hth.
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But I would rent to Bro's friend through the agent. 
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