Rental bonds are a standard practice throughout the rental property industry. Their purpose is to cover the landlord for property damage or rental payments default, and they are refundable to the tenant at the end of the tenancy agreement, provided all provisions are met. Fair Trading keeps the bond on behalf of the tenant and operates under government legislation.http://www.focuspropertymanagement.com.a

1. Fair Trading holds Rental Bonds to protect both Landlord and Tenant
Rental bonds are requested by landlords to protect their interests if a property should be
damaged by a tenant, or the tenant should default on rental payments. There are some
rules around the payment and refund of bonds which have been developed over time, and
these rules are in place to protect the interests of both landlord and tenant. The bond must
be in money and no other form such as personal goods or written guarantees is acceptable.
While it is not compulsory for a landlord to take a bond from a tenant, it is recommended as
it gives some monetary compensation in the case of damage.
Tenants can sometimes be apprehensive about handing over rental bonds as there have
been cases where unscrupulous landlords have tried to withhold a refund for the most flimsy
of reasons. If the landlord has placed their property in the hands of a Property Management
Sydney agency, tenants are more confident about their rental bonds as they know that most
agents follow the regulations.
The amount of a rental bond cannot be more than 4 weeks rent, regardless of whether the
property is furnished or unfurnished, and higher bonds cannot be requested where the
tenants have pets or children. These arrangements must be documented in the tenancy
agreement. Bonds can only be taken after the tenancy agreement has been signed, so
payments cannot be accepted from people on a waiting list for example.
Sometimes tenants confuse rental bonds with rental payments in advance. It must be made
clear that these are two separate transactions, and while landlords can request a bond and
two weeks rent at the same time, this is all that can be requested at the beginning of the
tenancy. If there is more than one tenant listed on the tenancy agreement, the landlord
cannot ask for a bond from both tenants. The rental bond is not held by the landlord but
must be lodged with Fair Trading. There is a Rental Bond Lodgement form which the tenant
completes and signs which is sent to Fair Trading along with the bond payment. This
ensures that the bond is kept “at arm’s length” from the landlord.
If the property is being managed by a Sydney Property Management agency, all these
details are looked after by them on the landlord’s behalf. Agents are allowed 10 days from
the end of each month to lodge all rental bonds they receive during that month. Tenants
cannot be asked to pay further money as bonds, known as “top-ups” further into the
tenancy. There can only be one bond per tenancy.
Fair Trading is governed by legislation designed to protect the interests of all parties in a
tenancy arrangement. Fines or a court appearance can be the result of not following the
rules as set down. When all parties conduct a tenancy by the rules, everyone wins.
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