At the beginning of a new tenancy, you have the option to collect and lodge a bond with Tenancy Services. A bond is money paid by tenants that essentially acts as a security deposit. This can be up to the value of 4 weeks rent.
What can a bond cover?
A bond can cover many situations. For example, if your tenants cause damage to your property, which goes beyond normal wear and tear, their bond will cover repair costs. Likewise, if they cannot pay rent, the bond will also go towards covering this.
Do I have to charge a bond?
You are not legally required to ask for a bond, but to do so is definitely in your best interest. Here are a few reasons why you should seriously consider asking for a bond the next time you begin a new tenancy.
Reasons why you should collect a bond
Peace of mind
A bond acts as a security deposit and it means that you won’t end up paying for any damage that your tenants cause. It also means that if they are unable to pay rent for any reason, you can take rent out of their bond. This means that you will still get paid at the end of the tenancy if any rent is left unpaid.
Attracting the right type of tenant
A tenant that is able to pay a bond, as well as a couple of weeks’ rent upfront is likely going to be more financially secure than a tenant who cannot. While you cannot accept or deny someone based on their employment status, it is important to take into consideration whether or not they will be able to afford rent. Charging a bond is a good indication to this.
Encouraging good behaviour
If tenants have a bond lodged with you, they are probably eventually going to want it back. This means they’re going to want to look after your property and stay on top of their rent so that they get back as much of their bond as possible.
Getting a bond from your tenants is a good way to know that you’re prepared for the future. If your tenants don’t take good care of your property, or miss rent payments, you can recover those costs once it comes time to apply for a bond refund. If your tenants don’t cause any damage, and never miss a rent payment, then they should get the entire bond back when it comes time for a refund.
For more information on bond refunds and how to organise this, see:
How do bond refunds work?
Featured photo by Sharon McCutcheon on Unsplash