How does a bond refund work? Rental News |

How does a bond refund work?

Once a tenancy has ended, you can apply for a bond refund. A bond is like a security deposit that tenants pay their landlord at the beginning of a tenancy. It is a maximum of four weeks’ rent that can be used to help cover damages or repairs that occur during a tenancy. If your property is left in good condition and there is only fair wear and tear, you should get most of your bond back when it’s time to leave. This is called a bond refund.

A bond refund comes at the end of the tenancy and it involves the landlord and tenant coming to an agreement. Here is the process you can expect when applying for a bond refund and waiting to receive your bond.

What is the first step before applying for a bond refund?

Before you apply for a bond refund, your landlord needs to do a final inspection with you. This involves going through the property and making notes of the condition once it is clean and empty. As you go through the property together for a final inspection, your landlord will take note of any damages. Damages will not include the normal wear and tear that you expect to happen when someone lives in a property.

Examples of fair wear and tear:

  • Carpet fading and thinning from use
  • Doors sticking due to humidity and the age of the house
  • Loose hinges on cupboards or doors from regular use
  • Leaky taps in the laundry or bathroom

Fair wear and tear refers to damage that occurs due to ordinary day-to-day use of a property. A broken window is not fair wear and tear but a window that won’t open due to its aging wooden frame is.

What happens if damages are found?

If damage is found and/or there is unpaid rent, you can expect this to come out of your bond. If your bond is not enough to cover this then you will need to pay your landlord the rest of the amount. But first, you and your landlord need to agree on:

  • the cost of the damages and/or unpaid rent vs
  • the bond refund amount

What happens if damages aren’t found?

If there is no damage or unpaid rent, the tenant is entitled to a full bond refund.

Article: What can be taken out of my bond?

How do I claim my bond refund in NZ?

If your landlord has carried out the final inspection, you should know how much of your bond you will get back. To claim it, you now need to fill out a bond refund form.

The bond refund form has to be filled in and signed by all tenants on a lease as well as the landlord. This form is sent to Tenancy Services who holds your bond throughout the tenancy and then organises the refund at the end. If you and the landlord do not agree on the refund amount, the issue will need to be taken to the Tenancy Tribunal. While having their services is helpful, we definitely recommend trying to reach an agreement with your landlord as this speeds up the process.

For a lease with only 2 tenants, you can use this bond refund form. For a lease with more than 2 tenants, you will also need to use the Additional tenants bond refund form.

Now, it’s time to send the completed form to Tenancy Services. You can do this by either:

  • scanning and emailing to [email protected]
  • posting to Tenancy Services, PO Box 50445, Porirua 5240

Either the landlord or the tenant can send the completed and signed form.

How long will it take to process my bond refund?

The Residential Tenancies Act 1986 does not specify the amount of time a landlord and tenant have to submit a bond refund at the end of a tenancy. However, once Tenancy Services receives the bond refund form they say it usually takes 10 days to process if it is fully complete.

Once your bond refund form is received,Tenancy Services checks that the:

  • Signatures match the first bond lodgement form
  • Account numbers match the first bond lodgement form
  • Refund amounts to landlord are clearly stated
  • Refund amounts to tenant(s) are clearly stated

If all is clear, you will receive the refund as a direct credit to the bank account provided on the form. If signatures don’t match or something else is incorrect, the bond will not be refunded. This process normally takes about 3 working days but allow for 10.

There is one common cause for delay with bond refunds. This is when forms do not clearly state how much of the refund is going to each person involved. On the other hand, making sure everything is carefully filled out will stop potential delays. Being very clear on exactly who is receiving what will ensure that the whole process runs smoothly.

What happens if a landlord and tenant disagree on the bond refund?

If a tenant and landlord can’t decide on how a refund needs to be split, they can approach the Tenancy Tribunal. This is a third party who helps to resolve renting disputes in New Zealand. They will take a range of factors into consideration when deciding who is entitled to what to ensure the decision is as fair as possible.

To make an application to the Tenancy Tribunal, you can go here.

Unclaimed bond

In the event that no-one applies for the bond refund, the bond will become the property of the government. Don’t worry if you’re late applying for your refund, this only happens 6 years after the tenancy ends.

Are you clear about who is receiving what portion of the refund and is everyone in agreement? If you are, it will be relatively quick and easy to apply for a bond refund.

Alternatively, you can apply to have your bond transferred to a new tenancy if you already have another property lined up.

To do this, all you need to do is apply to have your bond transferred.

For more information on how a bond works, see:

Article: What can be taken out of my bond?

Article: Collecting and lodging a bond

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