Things you should know about tenancy bonds
If you’ve ever rented before in your life, I’m sure you’ve had that initial confusing conversation regarding the first few weeks rent. It goes a little something like this;
“Yes, and I’ll need the first four weeks rent as bond.”
Tenant: “OK, so I’ll have paid the first month already.”
Landlord: “No, that’s just the bond.”
Tenant: “So I do need to still pay the first month’s rent?”
Landlord: “Yes, it’s just for the bond. You still owe rent.”
Tenant: “So you just keep that money?! Isn’t that illegal?! Will I ever see my cash again?! How will I even survive?!”
And so on.
So due to this confusion (which everyone has gone through – you’re not alone!), we’ve decided to walk you through the ins and outs of tenancy bonds; why they’re required, your rights and responsibilities as a tenant or landlord, and important considerations you should be taking into account when dealing with tenancy bonds.
What is a rental bond?
Ok, easy stuff first. A rental bond is an amount of money paid by the tenant to the landlord at the beginning of a tenancy agreement to ensure financial protection in the event of a tenant breaching their contract, causing damage to the property or is unable to make rent.
Tenancy bonds can only be taken after the prospective tenant has been given a copy of the proposed tenancy agreement, which must include any special terms and conditions that apply to the property, in addition to rules regarding parking rules or information about the body corporate.
Tenancy bonds can also be referred to as a security deposit, linen deposit, key/security card deposit or pet bond, but the defining character of a bond is that it does not go towards or include rent – it is paid in addition to rent.
So where does it go?
That money isn’t kept directly by your landlord or rental agent – so don’t worry that they’re going to spend your hard-earned cash and you’ll never see it again.
According to Queensland rental laws, once a bond is taken by a landlord or real estate agent, you should expect a receipt straight away. Then, they will fill in a bond lodgement form (which the tenant is required to sign) and afterwards, send all the bond money plus the form to the RTA (Queensland’s residential tenancies body) within 10 days of receiving the payment.
OK, but how much will I need to pay?
It depends on your own rental agreement with your landlord and/or rental agent.
Typically, the average bond is four weeks rent, as the law says if weekly rent is less than $700, landlords cannot charge more than four weeks as bond.
However, your landlord/real estate agent may be open to negotiating your bond, especially if you’re finding it difficult to front up the cash on the spot. Which leads us to our next point…
OMG! That’s so much! I can’t afford that – what now?
Of course, again this depends on your rental agreement. Often landlords or real estate agents will flatly refuse to rent to anyone who cannot pay their bond – and you can understand this point of view. Bonds are essentially insurance for property owners to keep tenants in line, or to ensure they’ll be able to recoup any damages or non-payments. But there are options if your lessor/agent is open to negotiation.
Firstly, it’s possible to pay off the bond in instalments over an agreed period of time. In this case, both parties should complete a bond lodgement form with each part-payment, lodging both the form and the money with the RTA within 10 days of receiving the payment every time the tenant contributes to their bond. The tenant should receive a receipt with each payment also.
The other option available is taking out a bond loan that the tenant can repay with partial payments, like above, or just tide you over until you can get the money together. Find more information on bond loans and eligibility criteria.
And when I move out, I get that money back, right?
So long as you haven’t inflicted any damage to the property (beyond standard wear and tear), you’re not breaching your rental agreement by leaving the property and you’re up to date on rent, you’ll be able to claim your tenancy bond back.
Just chat to your property manager, and make sure you both agree on everything first. Then you should fill out another form (you’ll get used to these pretty quickly if you’re moving about in the rental market a lot) and send it, signed by everyone, to the RTA and they will refund your tenancy bond as directed on the form.
However, there are cases in which both parties disagree on the refunding of the bond. If this is relevant to you, you can fill out a Refund of rental bond form, and lodge it with the RTA without the other parties’ signatures.
The RTA processes the first form it receives, refunds any undisputed amount to you, and sends the other party (or parties) a Notice of claim.
Once the appropriate person has received this notice, they have 14 days to dispute or agree with the claim. You can find more information about these procedures.
I’m just moving from one rental property to another, is there a way to simply transfer my bond money to the new property instead of going through the bother of having it refunded?
Yes, this is possible, so long as both the old and the new landlord/agent agree to it. If everyone is happy with this arrangement, simply inform the RTA of the change in bond agreements (guess what – it involves filling out yet another form) and you’re good to move into your new home!
We hope this has cleared a few things up – Happy Renting!