A tenancy bond is a payment of up to four weeks rent made to the landlord by tenants when they move into a property. The bond is held to cover any loses the landlord incurs if the tenant breaches any of the conditions in the Tenancy Agreement or general obligations of a tenant Acknowledgement Form.
The landlord will collect the bond from the tenant, but must lodge it with Tenancy Services within 23 working days, with a signed Bond Lodgement form (by both the landlord and tenant).
The bond is held by Tenancy Services until a Bond Refund form is filed (signed by both the landlord and tenant) by either the tenant or landlord. To ensure this part of the process progresses smoothly, it is important for the tenant and landlord to lodge any Change of Tenants or Change of Landlords during the period of the agreement.
If there is any damage to the property, at the conclusion of the agreement, and the landlord and tenant agrees as to the value of this then the bond is divided between the parties accordingly. However, if the parties are unable to agree on the value, then one of the parties can apply to the Tenancy Tribunal for mediation.
We consider it imperative that landlords and tenants understand whose responsibility it is to have insurance to make sure that both parties are protected against loss. Below is a general guideline for landlords and tenants.
The most important factor to remember when selecting insurance is to inform your insurance company that the property is a rental property.
The landlord must have insurance for the property, that is the physical buildings, section etc, against fire, storm, flood, damage from burglary etc, if they want it protected against loss. For these types of policies it is imperative that you advise the insurance company that the property is tenanted to ensure coverage. These policies often cover chattels, e.g. carpets and curtains, which is preferable, however this should be clearly defined and clarified with your chosen insurer.
It is also often recommended that landlords take some form of Property and Income Protection insurance. This is an additional insurance taken out by a landlord to cover for:
Loss of rents due to abandonment
Loss of rents due to eviction
Malicious damage/theft by tenants
Rent recovering whilst malicious damage is being repaired
The tenant must ensure they have personal contents insurance for their belongings to ensure they are protected against loss.