Relieving " Bond " Stress !

In a tight rental market the " bond " required to be lodged by a new tenant is now several hundred dollars and with high end properties it can run to thousands.   The purpose of that money held in security is to recompense the owner of the property should the tenant inflict damage or abscond leaving unpaid rent.

One of the problems is that return of the bond at the end of a lease usually takes time because the property needs to be inspected and a time gap of several weeks means the tenant must find the money to pay the bond required to secure their new rental home.   In many cases, they have no other option than  " pay day " lenders and their high interest rates.   That is a money trap that becomes enduring and is hard to escape.

The government is preparing legislation to allow bonds to be transferred from the old rental property to the new by way of a provisional certificate.   The vast majority of renters have their bond reimbursed in full and this type of transaction would speed the money transfer when the rental  outcomes involve entirely separate rental agents.

The legislation is still evolving and it needs to protect both the renter and the landlord, which was the initial purpose of lodging a bond.  It was a guarantee that the renter would be a good tenant and maintain the property and pay the agreed rental promptly on time.  This provisional certificate idea means that instead of the transfer of banknotes, the bond passing between properties takes the form of a slip of paper.  The onus will fall on the agent of the outgoing property to take a degree of responsibility for the issue of that certificate.

The big question is what happens if a damages claim occurs after this provisional certificate has secured a new property ?   If the landlord has to extract the money owed from the outgoing tenant the whole purpose of the bond has lost logical meaning.   If that charge is extracted from the new bond then the new landlord is left with insufficient cover on the new rental property.

It will certainly increase the responsibility of the letting agency.  The actual bond is lodged with the Rental Bond Board who would need to change their records to accomplish this change but the letting agency would need to accept some responsibility for issuing a provisional certificate.  They would be unwise to do that without inspecting the property for visual damage.

Th is will be a very difficult piece of legislation to enact.  The bond money is safely deposited with the Rental Bond Board but the release is in the hands of the letting agency.  Unless the area of responsibility is settled most letting agents will refuse to release bonds until the landlord signs the all clear.  There is the possibility that this change may achieve nothing !