Rental bonds for landlords and tenants – rights and responsibilities

Property management

What is a rental bond? And what are the landlord’s and tenant’s rights, rules and responsibilities with regards to rental bonds?

What is a rental bond and how much bond can be taken?

A rental bond is a portion of rent taken when a tenant takes possession of a property. Depending on the state you own property in, the bond can be between four and six weeks rent. The bond must be held in trust until the tenant vacates the property.

The rental bond exists as security for the landlord. If a tenant damages a property, vacates without notice or does anything that costs the landlord money, a portion of the bond or all of the bond can be withheld to cover the expenses.

To find out how much bond is allowed in your state, contact the following authorities:

  • New South Wales: Office of Fair Trading
  • Victoria: Residential Tenancies Bond Authority
  • Queensland: Residential Tenancies Authority
  • South Australia: Residential Tenancies Fund
  • Western Australia: Dept. of Commerce’s Bond Administration section
  • Tasmania: Rental Deposit Authority
  • Northern Territory: Dept. of Justice
  • Australian Capital Territory (ACT): Office of Rental Bonds

These authorities can tell you how much bond you can collect and advise you on your rights and responsibilities. They will also give you a rental bond lodgement form, which must be completed and given to the authority along with the bond money.

Tips for landlords: What are the landlord’s rights when it comes to a bond?

A landlord has the right to withhold a portion of the bond if a tenant has done any of the following:

  • Damaged the property
  • Cleaning expenses
  • Abandoning the property
  • Tenant leaving bills that are their responsibility to the landlord
  • Loss of landlord’s goods
  • Unpaid rent

These are some of the landlord’s rights, but the landlord also has responsibilities. Their first responsibility is to forward the bond money to their state authority. This is to ensure the landlord has the funds on hand to return to the tenant and ensure the landlord does not unfairly withhold bond.

Other landlord responsibilities

Landlords also have other responsibilities. They must give tenants copies of the booklet published by their state outlining a tenant’s rights. Other landlord responsibilities include:

  • Making sure the property is clean before a tenant moves in
  • Keeping the property maintained
  • Making sure all doors have locks and windows can be secured

Landlords have a right to inspect the property, but they do not have the right to inspect the property more often than is stated by law in their state. They must also give the tenant notice of their intent to inspect the property. In Victoria, a landlord must give seven days notice. In other states, they may be given less or more time to give notice. In most cases, a landlord can inspect the property three months after a tenant moves in and periodically (usually six months) after that.

There are some exceptions to the rule. For example, if a landlord wants to sell a property, they can have the property valued and show prospective buyers the property. They can also enter the property if the tenant is not at home. They must give tenants notice first and not just show up with a valuer or buyer. If a tenant has indicated they are vacating a property, the landlord can show prospective tenants the property.

Tenant rights

Tenants have rights, too. One of their main rights is the expectation that the landlord will carry out any repair or maintenance issues promptly. The rental lease agreement will outline more of a tenant’s rights and may outline more of their responsibilities.

The rental lease agreement should be given to the tenant before they post their bond or pay rent, giving them a chance to review it before they take possession of the property. The tenant has the right to dispute a clause or clauses in the lease agreement if they feel it is unfair.

Repair and maintenance issues can become a sticking point between tenants and landlords. Basically, there are three types of repairs and maintenance issues. Emergency repairs should be carried out immediately. These urgent repairs may include electrical outlets that pose a fire or electrocution danger; no hot water or even if water is blocked in any part of the house or apartment.

Non-urgent repairs can lead to disputes. Consumer Affairs Victoria discovered that 53 percent of tenants had experienced problems getting non-urgent repairs completed. 40 percent of tenants felt that the repairs were not completed promptly or to an acceptable level.

Some other rights many tenants don’t know they have include the ability to dispute an unfair rental increase and tenants have protection against a retaliatory eviction. Rents can’t be increased by more than the rental increases in a given suburb and retaliatory evictions may be due to an argument with the landlord over an issue.

Retaliatory evictions can be a matter of dispute. If a tenant is on a fixed-term agreement, the landlord cannot evict a tenant without reason. If a tenant is on a periodic lease, the landlord can evict a tenant without giving a reason. The only exceptions to this rule are in Tasmania and the ACT. However, the landlord must give the tenants notice of a “no grounds” eviction to give them an opportunity to find another home.

Retaliatory evictions can be disputed, though and in some cases, the tenant wins. One example was on the Central Coast of NSW when a landlord increased a tenant’s rent by $130 per week. The tenant disputed the increase and was given a retaliatory eviction notice. The Central Coast Tenants’ Advice and Advocacy Service helped the tenants apply for orders deeming the rental increase excessive and the eviction notice retaliatory and the case didn’t have to go before a tribunal.

Unfair rental increases can be a tricky area. If a tenant feels the rent has been increased too much, they have to take the condition of the property into consideration and the range of prices in the area. They also need to take into consideration the length of time since the rent has been increased. Different states have different rules for this:

  • In NSW, there is no limit, but the landlord must give the tenant 60 days notice to allow them to find another place to live
  • In Queensland, Victoria, Western Australia and the Northern Territory, rental increases can be made once every six months and the tenant must be given 60 days notice
  • In the ACT, Tasmania and South Australia, rental increases can be given once a year and the tenant must be given 60 days notice

The important thing to remember for tenants and landlords is that 60 days notice must be given and excessive rent increases can be disputed.

Can you transfer a bond if you are a tenant?

Since bonds are lodged with a state authority, bonds can be transferred if a tenant moves to a new location. If the landlord has taken some bond money out for cleaning or repairs, the tenant may have to make up the difference, but bonds can be transferred. A bond transfer form allows them to transfer the bond to another landlord.

Withholding bond money

As mentioned above, a landlord has the right to withhold some or all of a tenant’s bond if they damage the property, leave it in an untidy state, leave without paying rent, loose property or have unpaid rent. The landlord must be able to prove they are withholding bond money and may need to take photographs of damage or untidy premises to prove their point.

How long does it take to get your bond back?

A landlord has the right to withhold bond money, but if the tenant has a right to a full or partial bond return, the landlord must return the bond within 14 days in most states.

A landlord may withhold some bond money for unfair reasons. For example, the tenant does not have to pay for carpet cleaning unless it is clearly stated in their lease agreement.

Breaking a lease can be grounds for withholding bond money, but it depends on the lease agreement. If a tenant is on a fixed term lease, they cannot break the lease and the landlord can withhold all of their bond money and perhaps get even more compensation. If the tenant is on a periodic lease, they can break the lease agreement, but only if they give the landlord sufficient notice in advance. Breaking a lease can be valid if a tenant:

  • Experiences undue financial hardship
  • Finds their home or apartment becomes uninhabitable because a landlord fails to carry out important repairs
  • Feels the landlord has breached an agreement

A tenant may have to go before a Tribunal to prove they have broken a lease for a valid purpose. If they win the case, the landlord cannot withhold their bond money unless they have a valid reason.

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