Why you need More Bang for Your Bond!

Renting can come with one or two challenges in New South Wales, but often the first and most pressing is paying the bond. In Sydney, where median rents are pushing $500 a week, it means keeping a couple of grand handy just in case you need to move on short notice. But tenants can console themselves that they remain entitled to recover the bond as soon as their tenancy ends.

Bonds are tenants’ money – the Rental Bond Board only ever holds them on trust. Of course, a landlord can make a claim against a bond if the tenant has caused them some financial loss. But where there is a dispute about who gets the money, the landlord bears the onus of proof. They must demonstrate how and why it should be put towards their costs, because on the face of it the bond is the tenant’s money.

This brings us back to those challenges for tenants. From fending off opportunistic or even downright bogus bond claims, to trying to get your landlord to take an outbreak of mould in the bathroom seriously, renting a home comes with built-in levels of despair. No doubt there are stresses for landlords, too, but perhaps they’re not on the same scale.

There are very different outcomes pursued by those who place themselves at the whims of a rental market. For landlords it is generally a question of wealth creation. If it all gets too hard, it is easy enough to liquidate and find somewhere else to park your money. But for tenants it’s about keeping a roof over one’s head. Bailing out is for the lucky few at one end of the income scale, and the unlucky at the other. For most in the middle, renting is often just a place to lump it while your landlord makes off with the proceeds.

You can also see this imbalance in the kinds of dispute each party is likely to bring to the Tribunal, and the types of remedy available. The most common action by landlords is to seek to end a tenancy, and have the tenant vacate the property. An officer of the sheriff can enforce this kind of Tribunal order, and they may use reasonable force if necessary. On the other hand, tenants are more likely to bring an action to have repairs and maintenance carried out, and there’s no real way to have this enforced. Where a landlord refuses to comply with a repair order, it falls to the tenant to take them back to the Tribunal and give it another go.

On top of this, landlords have the support of an entire industry of real estate agents and property investment experts to help them negotiate whatever difficulties they might encounter. Tenants don’t have this. But they do have large amounts of bond money held in trust by the Rental Bond Board. This money generates interest, and our renting laws say that interest on tenants’ bond money may be used to fund ‘advisory services’ for tenants.

In New South Wales, the Tenants’ Advice and Advocacy Services have received funding from the interest on tenants’ bonds for more than twenty years. Fair Trading NSW provides a service to tenants, too, but they are unable to replicate the work of Tenants’ Advocates. They are part of the machine of government, and they quite rightly remain impartial. Their telephone information services are available to tenants, landlords and real estate agents alike, and their operators approach each conversation as though the other side is listening. And as a consumer protection agency they must focus on a great deal more than just tenants’ and landlords’ rights and responsibilities - they have about 40 different pieces of consumer law to get their heads around. They are simply unable to develop the high levels of expertise in residential tenancy law and practice that independent, specialist services can.

But the Tenants’ Advice and Advocacy Services are struggling to keep up with demand. They have not had a real increase in funding since 2002 – although the number of people renting in New South Wales has gone up by 25% since then. In such an environment services are necessarily restricted to the most needy. Tenants with a ‘low-level’ need for advice or support are finding it difficult to get through.

The working family paying $500 per week to rent within a half-hour commute of the office, who’s just had their home sold out from under them and is worried about getting their bond back, has a genuine need for good quality advice. Sure, they might not be faced with the immediate prospect of long-term homelessness, but if such tenants are not able to obtain independent, specialist advice when they need it, then our system is letting them down.

This brings us back to tenants’ bonds, and the interest they generate. As the number of people renting goes up, so does the number of dollars held by the Rental Bond Board. And so too the amount of interest they earn. Currently, the NSW Rental Bond Board holds in excess of $1billion of tenants’ money, generating about $60million in interest each year.

For every single dollar of interest that tenants’ bond money earns, 68 cents goes to NSW State Government to fund services such as the Tribunal and the Rental Bond Board. 10 cents is added to that $60million surplus. 8 cents is put towards the funding of Tenants’ Advice and Advocacy Services. Less than one cent is paid out to tenants directly when they recover their bonds. The rest is divided between other community services such as financial counselling and a No Interest Loans Scheme.

Visit www.yourbond.org to see where your interest goes

This can’t go on. Tenants’ money should be used for the benefit of tenants.

The NSW Tenants’ Advice & Advocacy Services and the Tenants’ Union of NSW are currently campaigning for more of the interest on tenants’ bonds to be returned to tenants, and to better fund the Tenants’ Advice and Advocacy Services. Visit www.yourbond.org to find out how you can support the campaign.