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What Is A Rental Bond Used For?
●May 13, 2021●4 minute read
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Before you move into a rental property, you will likely be asked to pay a rental bond. This type of bond is usually a large amount of money to pay upfront, typically the equivalent of four weeks rent.
So, what exactly is a rental bond used for and why do most real estate agents ask for one? Find out everything you need to know about rental bonds below.
What is a rental bond?
A rental bond is a sum of money paid by the tenant at the beginning of their lease agreement. It serves as collateral for the lessor (or real estate agent) in the event of the property being damaged or left in an unfit condition. The bond can be used to cover any costs for fixing the state of the property. The rental bond must be specified to the tenant in their lease agreement.
In most Australian states, rental bonds usually amount to four weeks rent. In South Australia, a rental bond can be six weeks rent if the weekly rental amount is over $350.
Who holds the rental bond?
While it is the landlord or agent that requests and handles the paperwork of the bond, they don’t typically hold the money. It is often held by the relevant state government in a bond trust.
Rental bonds must be lodged with the respective state or territory bond administrator within the specified timeframe. Here’s a quick rundown of each state or territory’s bond administrator:
|Australian Capital Territory
||Office of Rental Bonds
|New South Wales
||Office of Fair Trading
||Landlord or property manager
||Residential Tenancies Authority
||Consumer and Business Services
||Rental Deposit Authority
||Residential Tenancies Bond Authority
||Consumer Affairs Bond Administrator
When do you get your rental bond back?
Rental bonds are released at the end of your tenancy agreement or when you vacate the property. Generally, in order to ensure you receive the entire amount of your bond back, a tenant needs to ensure:
- There is no rent owing;
- There is no damage to the property;
- The property is left in a clean and tiny condition;
- A detailed condition report is provided.
When can a rental bond be claimed against?
If you leave the property in the same condition it was when you moved in, you should receive your full rental bond amount back. There are cases in which the landlord or agent can claim against your rental bond, including for:
- Rent arrears (unpaid rent);
- Damage to the property caused by the tenants or guests of the tenants;
- Cleaning expenses (if the property was not left in a sufficiently clean condition);
- Abandonment of the premises;
- Loss of goods;
- Any other reimbursement.
There are assurances in place to prevent any disputes, including condition reports. In Queensland, tenants are required to complete both an Entry Condition Report and Exit Condition Report. In this process, tenants must inspect the property based on photos to ensure that the provided information is accurate. If there are any discrepancies, there are sections of space on the report for the tenant to make note of this.
What happens if there is a dispute on a bond claim?
If you have had a claim made against your bond that you don’t agree with, there are procedures in place with the relevant government offices. All parties will be required to follow the dispute resolution process to reach an agreement.
Tips to avoid bond disputes
There are things that you can do to actively avoid any future disputes or claims on your rental bond. If there is a case in which an unjust claim is made against your bond, these tips can help you defend yourself:
- Ask for a receipt after your bond has been lodged with the relevant government body;
- Read all of your documents carefully and don’t sign anything until you fully understand all of them;
- Keep copies of your receipts for bond and rent payments;
- Give written notice before you vacate the premises;
- Leave the premises clean. You may wish to consider hiring a bond cleaner to ensure that the property is left in a sufficient condition. Make sure you keep your receipt for any cleaning or pest control completed;
- When you are moving out, take photos of the premises;
- Return all keys you were given when you vacate. If you lost any keys, ensure you let the landlord know so you can pay to have them replaced;
- Keep records of any maintenance requests you submit;
- Keep copies of any quotes or receipts for work that was carried out at the property.
What if you can’t afford to pay your rental bond upfront?
Moving is expensive enough already without the added cost of a rental bond. If you can’t afford to pay your bond upfront at the beginning of your lease, there are other options you may wish to consider including:
You can ask your landlord to pay your rental bond in instalments until the full bond amount is paid. The relevant procedures must be followed by the landlord to notify the government body of your bond payment.
Rental bond loan
Alternatively, you can use a rental bond loan to cover your bond. Using a rental bond loan allows you to borrow the entire amount to be repaid in instalments over time.
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Written by Rachel Horan
Rachel Horan is a Content Writer for Jacaranda Finance. Rachel has previously produced content for Brisbane City Council, Black & White Cabs, and Clubs Queensland. She has a Bachelor of Mass Communication with Distinction from the Queensland University of Technology.