Your Guide to Understanding the Rental Bond Scheme
It’s one of the most frustrating parts about moving from one rental property to another – organising the bond for a new place when you haven’t even received the bond for the old place back yet. With rental prices in Sydney continuing to rise, the bond and rent in advance can often end up being thousands of dollars in total. It comes as welcome news, then, that the NSW Government recently introduced reforms to address this issue.
What is the new rental bond scheme?
In November 2018, the NSW Government passed legislation regarding the rental bond system as part of its Better Business Reforms agenda.
The legislation aims to simplify the rental bond rollover process, making it easier for tenants to transfer their bond from one property lease to another.
What are the benefits of this scheme?
The reforms are intended to reduce financial pressure on tenants during the process of moving, and may help them avoid having to use payday lending schemes, which offer short-term loans at relatively high interest rates and can potentially trap tenants in cycles of debt.
According to the NSW Government, the new rental bond rollover scheme is expected to save $35 million over the next 10 years and benefit up to 300,000 tenancy holders annually.
In addition, landlords will be protected under these reforms and will be able to obtain any shortfall in the transferred bond amount. The transferring of bonds will also only be applicable in situations where a tenant leaves a property with no outstanding dues.
What are the disadvantages of this scheme?
Though there are no clear disadvantages to this scheme for either tenants or landlords, it is important to know that it is currently in the process of being implemented. As such, it is unclear whether there will be any further changes to elements like the bond recovery process.
Either way, it is clear that a rental bond scheme that works for all parties involved in the renting process is of great importance, as rental properties are growing in number across NSW. A report from the lobby group the Committee of Sydney found that more than 40% of neighbourhoods across the Greater Sydney region have a majority of renters and not owners, so protecting the rights of both tenants and landlords is crucial.
If you want to know any more details about the current acts and regulations regarding strata schemes and much more, check out our comprehensive document bank.