What are Rental Bond Schemes and How they Can Work for You
Rental Bond Schemes are an essential part of the Australian rental process.
They are essentially a security deposit paid by a tenant at the start of their tenancy to safeguard the landlord from any possible damages during the lease term.
Rental bond schemes and other tenancy reforms ensure that the collateral is safely held by an independent third party and can be returned to the renter at the end of the tenancy if the property is left in good condition.
In most states in Australia, the rental bond is equivalent to four weeks' rent. However, this may vary depending on where you live and the type of property you are renting.
The Rental Bond Board
In New South Wales, the Rental Bond Board (RBB) is the government body that oversees the rental bond scheme. The RBB holds rental bonds on behalf of tenants and landlords for the duration of the tenancy. The board offers two types of rental bond schemes: custodial and insurance.
The custodial scheme is free, and the RBB holds the bond until the tenancy terminates. The funds are invested in safe, interest-bearing accounts by the RBB, and any interest gained is used to support the rental bond scheme.
For a fee, the insurance scheme enables landlords to hold the rental bond themselves while still complying with the legislation. If a landlord fails to return the renting bond at the end of the tenancy, the RBB can step in and pay for any unpaid rent or damage.
Residential Tenancies Bond Authority
The Residential Tenancies Bond Authority (RTBA) is responsible for the rental bond scheme in Victoria.
The RTBA is an independent body that holds bonds in trust for the duration of the tenancy. The RTBA service is free to tenants, landlords, and agents and invests the funds in secure, interest-bearing accounts.
When a tenant pays the rental bond, the RTBA sends a confirmation letter to the landlord. It includes details like the bond number, deposit amount, and the name of the person who paid the bond.
Residential Tenancies Authority
In Queensland, the Residential Tenancies Authority (RTA) is the government body that oversees the rental bond scheme.
The RTA is responsible for enforcing the tenancy laws and resolving tenancy disputes. The RTA offers an online bond management system called Bond Lodgement Web Services (BLWS), which allows property owners and managers to lodge rental bonds online.
The RTA holds the rental bond in trust for the length of the tenancy. If the owner doesn't claim at the conclusion of the tenancy, the RTA refunds the rental bond to the former tenant. If there is a disagreement about the deposit, the RTA is authorised to settle the matter.
Rental Bond Scheme Legislation
The Australian government introduced the rental bond scheme legislation to protect people paying or collecting rent.
The Residential Tenancies Act sets the rules for paying and refunding rental bonds. There is a legal requirement for landlords to lodge the rental bond with a scheme that is backed by the government.
The landlord must give the tenant a receipt that includes the deposited amount, the tenant's name and the rental property's location upon bond payment as required by law. The landlord must also give the tenant a copy of the rental agreement outlining the tenancy conditions.
At the end of the tenancy, the rental bond must be refunded to the tenant if the property has been left in good condition.
There must be no outstanding rent payments, and the terms of the tenancy agreement must have been met. If there is any property damage or the tenant still owes rent, the landlord can claim to keep the bond payment.
It is important to note that if the landlord claims the rental bond, the tenant has the right to dispute the said claim. In such cases, the rental bond will be stored by the rental bond scheme until the dispute is resolved.
Tips for Tenants
As a tenant, recent law reforms aim to protect you, but it is still essential to understand your rights and responsibilities regarding the rental bond scheme.
Here are some helpful tips to ensure a smooth deposit return process:
- Make sure to inspect the property thoroughly before moving in, and take note of any existing damages or issues. This will help to avoid any disputes over the rental bond at the end of the tenancy.
- Keep a record of all communication with your landlord, including emails, letters, and phone calls. If your landlord files a claim against your rental bond - you will need all the information you can get to ensure a transparent case.
- Ensure you pay your rent on time and in full to avoid any claims against the rental bond. If you have a good enough credit record - you can avoid being late on your rent by paying for it with a credit card. This way, you can present yourself as a responsible tenant who pays rent on time while further solidifying your credit score.
- When moving out, make sure to clean the property thoroughly and remove all of your belongings. Pay close attention to each room and consider end-of-tenancy cleaning if necessary. Sometimes it’s better to pay for cleaning and receive a bond back than not receive anything.
- If any damage has occurred during the tenancy, repair it or report it to the landlord as soon as possible. You can also look into local handyman services for tasks that might be beyond your ability or understanding.
- If you have any concerns or a dispute regarding the rental bond - contact your rental bond scheme executive or the relevant government body for assistance. Never try to solve matters with your landlord on your own. It seldom works and often puts tenants in a negative light in the eyes of authorities.
Final thoughts
Rental bond schemes are an essential part of the renting process in Australia because they safeguard both tenants and landlords.
You can guarantee a smooth rental bond process and safeguard your interests by understanding your rights and responsibilities and following the guidelines set forth by the rental bond scheme legislation.
An extra step that can help retrieve your bond is to hire an end of ease cleaning service.
