What is Bond Rent? Read A Comprehensive Guide to Rental Bonds
Have you wondered what is bond rent? Navigating rental rules, laws, and regulations can be complex to navigate as a renter.
It always pays to stay informed and up to date with aspects of renting. After all, housing is an integral part of life, and it makes sense to know all you can about your situation when renting.
And of course here at Little Fish Real Estate, we like to keep you up to date.
For landlords, an investment property can be a steady source of passive income. However, they also must provide decent housing to their tenants, repair issues and keep the property in good shape. After all, an investment is a long-term strategy for profit. It makes sense to treat an investment property decently.
For renters, signing a lease means that you commit to paying your rent on time to keep a roof above your head. You also have obligations to keep the property in good repair and notify the property agent if any damage occurs.
This is where rental bonds come into the equation.
Don’t worry if you don’t know anything about rental bonds yet. In this article, we’ll share a comprehensive guide to rental bonds.
You’ll learn everything there is to know about rental bonds, which is excellent knowledge to have. If you’re a renter, this guide is a necessity.
Staying informed about your rights as a tenant is a vital part of renting.
Now, before we get too far into it, if you are looking for townhouses for sale in and around Melbourne, go here. Let’s get into it!
What is a Rental Bond?
A rental bond is an amount of money that tenants pay prior to moving into the property.
A rental property agency/manager usually arranges this on behalf of the landlord.
The bond amount works as financial protection if a tenant breaches the lease agreement. It’s worth noting that a lease agreement is a binding legal document, like a contract.
You pay a bond before moving into your new home in most cases. It is very rare to not pay a bond prior to moving into a rental property. In fact, it would raise alarm bells in most cases.
How do Rental Bonds Work?
States governments manage trust accounts that hold rental bond funds. A financial institution such as a bank provides the trust account and keeps the money safe.
It is the job of the landlord (if privately managed) or the property manager to lodge the required paperwork and the cash with the relevant authority.
The lease agreement document will usually list the bond required. Maximum bond amounts can vary across Australia, depending on the state you live in.
As a rule of thumb, a usual bond is around four weeks’ worth of rent, with occasionally an additional amount if the property is provided furnished.
When tenants move to another property, either due to renting elsewhere or purchasing a home, the bond amount is returned to them.
Getting a Bond Payment Back
Tenants usually need to allow a month or so to get their bond refunded, even without any disputes. This is because paperwork takes time, approvals are required, and sometimes parties can hold up red tape.
For instance, an error in banking details can result in a delay, as can incorrectly lodged forms.
A landlord can claim the bond if the tenant has damaged the property in any way. They are entitled to use the amount to pay for repairs or excess fees on insurance.
For instance, if tenants damage walls, floors, windows or other parts of the property, the landlord is entitled to claim the bond back to put towards the repairs.
However, they also need to follow a process and submit plenty of red tape.
If a landlord intends to claim a bond, they need to go through the process within a week or two of you leaving the property. If they delay, they may not succeed in their claim. In this case, you would get your bond back.
If a bond claim is successful, the relevant consumer tribunal in the state (VCAT, NCAT, etc.) will issue an official order on the claim. This order is then passed to the relevant state bond authority, which releases the funds to the agent or landlord. After this, there is no way to get your bond back.
How Can I Ensure I Get My Bond Back?
If you’re renting and want to get your bond back at the end of your lease when you move, you can do a few things.
The first thing is always to pay your rent on time during your tenancy. This way, there are no arrears that a landlord can claim from you. It’s also the right thing to do, as you’re paying for the home you live in.
You can also minimise any damage caused to the home beyond reasonable wear and tear. Reasonable wear and tear include scuff marks, minor scratches, dents, and other cosmetic damage that is easily repaired or remediated.
Significant damage, such as holes in the wall, broken windows, damaged appliances, or other costly damage, is not within reasonable claims of wear and tear.
The third thing is ensuring that you have lodged your bond correctly. Be wary if a landlord asks for a bond in cash – this is illegal and not allowed. Ensure the paperwork is all up to standard and ask for a receipt from the authority.
Another tip is to inspect the property before moving in, taking pictures of any damage, and completing the “move-in report,” which should detail the state of the home before you move into it.
While you live in the property, make sure to report any repairs required or maintenance tasks to the landlord or property manager in writing. This way, there is a paper trail, should they attempt to claim your bond. This also ensures that the home remains acceptable to live in.
More Tips to Get Your Bond Back
Ensure that the landlord or property manager has inspected the premises and provides you with a copy of their report when leaving the property. Check the paperwork to see if they are claiming your bond. Request a confirmation of no claim via writing, as you are getting ready to leave.
In most cases, getting things in writing and keeping open lines of communication between the landlord and property manager means avoiding a bond dispute.
Can a Landlord Ask for More Bond Payments?
A landlord can’t ask for a second bond if the tenant stays in the home for consecutive years. While they can increase the rent each year, they can’t request a second bond.
In Victoria, this rule doesn’t apply if the tenant did not pay a bond during the first lease, the weekly rent is higher than $900, or the lease agreement has been in effect for more than five years. Other states have similar rules.
What Costs Can Landlords Claim?
There are specific guidelines to what landlords can claim from rental bond money.
Here’s a helpful list:
Damage – any damage to the premises caused by the tenants or their guests, beyond the above-mentioned wear and tear
Rent arrears – rent that has gone unpaid
Losses caused by tenants – this includes things like damage or destruction of furniture and appliances are included in the lease agreement
Cleaning costs – costs incurred by tenants not keeping the premises reasonably clean, beyond reasonable wear and tear.
Abandonment costs – if tenants break a lease or otherwise abandon the property, causing losses
Other liabilities – any other losses caused by the tenant, provided they are in the lease agreement. This could be unpaid utilities or other bills.
In this helpful article, we’ve explained a renter’s guide to everything you need to know about rental bonds. This will be useful if you continue to rent. If you are interested in making money from the rental market yourself, check out this article on rentvesting.
We’ve covered it all. We discussed how property managers lodge bonds, as well as how landlords can claim damages.
Remember to follow the above advice for getting your bond back when you move.
We hope you’ve enjoyed this informative blog. If you have any questions, feel free to contact us anytime, we would love to hear from you.