When it comes to renting a property, there are a couple of financial matters that you should prepare yourself for. This includes paying rental bond.
Keep reading to learn more about rental bonds, how they work, and answers to frequently asked questions concerning rental bonds.
According to the Tenants’ Union, the term rental bond is used to describe money held for property management purposes on behalf of the landlord. It acts as a security deposit.
Although the bond amount that must be paid at the commencement of a tenancy will depend on your state or territory jurisdiction, it is usually between one and three weeks' worth of your weekly rent payments.
This can vary depending on what your property manager feels is necessary as financial protection for them, and this cost may need to be added to the total cost of renting for you as a tenant.
If any damage or repairs are needed that go beyond normal wear and tear, then the landlord or agent may claim some or all of this bond back from you. This can occur at any time during your tenancy, but the bond has to be returned within 21 days of your tenancy ending.
Remember that rental bonds have to be paid at the start of your tenancy. You will most likely need to complete a bond lodgement form when registering for a rental property. This will be part of your residential tenancy agreement (which is usually created by a residential tenancies authority). In South Australia, a rental bond is also lodged with your property manager's Consumer and Business Services (CBS).
If you do not pay a rental bond in full, then hefty fines can be imposed on you as a tenant. In most cases, this means that your bond is not valid and cannot be used.
In some instances where there is ongoing damage to the property or repairs have been carried out without approval from the landlord or property manager, you may also lose all or a portion of your bond money.
In this case, there are usually fewer fees incurred. Online rental bonds are becoming much more common in today’s day and age. You can lodge and refund your rental bond online with NSW Fair Trading’s Rental Bonds Online service if you are renting in New South Wales via the internet, without going through any third parties such as real estate agencies.
The money paid as a rental bond is not the property of the tenant, but rather it belongs to the landlord or property manager. This money is used as security in case of any damage to the property or if repairs are needed that go beyond normal wear and tear. It can also be used to cover any unpaid rent or other tenancy breaches.
If everything goes smoothly and there is no damage to the property, the landlord or agent will eventually return this money to you at the end of the tenancy.
This is after you have vacated the premises and provided an inventory report stating that all is in order. If there are any damages or costs associated with repairs, then some or all this bond money may be used to cover these expenses.
In most cases, tenants will need to pay a bond as per the agreement they have signed with their landlord and will not receive a bond refund. However, there are ways in which you can avoid paying and losing your rental bond by taking advantage of assistance from real estate agents or by renegotiating your terms and conditions before you sign off on the contract.
In most jurisdictions, a rental bond does not include additional fees such as advertising fees. If these charges apply, then the tenant is usually required to pay them directly to the real estate agent or landlord before they can move into their new home.
As per the agreement with your landlord, failing to pay your rental bond can result in fines and other penalties. In some cases in New South Wales, the bond may be considered invalid by Fair Trading, and you will not be able to use it as security for your tenancy. Always try to pay your rental bond in full and on time to avoid any unnecessary headaches.
Rental bonds do not earn interest in Australia.
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