Proposed rule change could save renters thousands
The competing pressures of Australia’s housing crisis and rising inflation has seen renters across the country feel the pinch - but one of Labor’s 2023 state election promises could provide some relief from renters in New South Wales.
NSW Labor leader Chris Minns has made a proposal that would see bonds paid for rentals become “portable”, meaning that they could be transferred from one property to another when tenants move, as reported by realestate.com.au.
The change could reduce the amount renters need to save prior to moving, given that bonds are one of the biggest costs for tenants, and allow a bond to be moved to another property when a new lease is signed.
Landlords would receive a certificate from the NSW Rental Board that would hold the rental bond tenants paid on the previous property, with the Board also being responsible for managing payments of cost differences and claims for property damage.
Tenants Union NSW CEO Leo Patterson Ross said the proposal was welcome and urged the rest of Australia to adopt similar legislation.
"We support the proposal as part of addressing the increasing costs of bonds and renting generally," he said.
"The legislation to allow it occurred in 2018, but was never implemented."
Currently, renters moving between leases are forced to take out loans to pay for the new bond while waiting for their previous one to be refunded, in what Mr Patterson Ross called a “double bond”.
"The pain point of double bonds at the end of tenancies causes people a lot of issues," he said.
"The average bond in NSW at the moment is $2200 and more than 60% of bonds are returned in full to the renter, while less than 15% are kept in full by the landlord.
"Having to produce $2200 to cover the gap between one tenancy and the next is increasingly being exploited by lightly regulated pay-day lenders, which may rely on fees as well as interest to apply very high lending costs."
If NSW introduces the portable bond scheme, it would be an Australian first, but there are other ways governments can help renters out.
In NSW and most other states, the government offers interest free loans to help cover the cost of bonds, but these programs are only available to those in social housing.
However, renters in the ACT who are on moderate incomes - $101,868 for singles and $135,284 for couples - are also eligible for this scheme.
Mr Minns is also proposing laws to require landlords to provide reasonable grounds for evicting tenants, a change from current rules where tenants can be evicted without a reason given if they are on six-month or 12-month leases.
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