Bonds and rent
A landlord can ask for a security bond in advance to cover any costs that you may have to pay at the end of a tenancy. This might be to cover any damage you caused to the premises or contents, water charges or unpaid rent.
The bond is your own money and must be held by the landlord in trust until the end of the tenancy. The bond cannot be used by any party or person unless by written agreement or by a court order.
The bond generally cannot be more than four weeks’ rent, with some exceptions. These exceptions are:
- where the weekly rent is more than $500 (any amount of bond can be requested but you should check how much it is before agreeing to a tenancy);
- where the owner of the property was living in it for the previous three months (any amount of bond may be requested); and
- where you have a cat or dog, or both (an extra $100 can be charged to meet the cost of fumigation that may be required at the end of the tenancy).
Who holds the bond?
When you or another tenant pay the bond, the landlord must give a receipt on the spot, showing the name of the person who paid, the amount, date and address of the rental premises.
Within 14 days, the landlord must put the bond into a ‘Tenancy Bond Account’ with the State Government’s Bond Administrator (a section of the Department of Commerce), or an authorised financial institution (bank, building society, credit union).
If a real estate agent is handling the property the agent should deposit the bond as soon as possible into a ‘REBA Tenancy Bond Trust Account’ held with a financial institution such as a bank, or into an individual tenancy bond account held by the Bond Administrator.
The bond must be held in a joint account showing your name and the names of the owner. A Form 8 (Lodgement of Security Bond Money) must be lodged and signed by you or the person who paid, and the landlord. Financial institutions may have their own version of this form.
If more than one person has paid the bond (e.g. in a shared house), it is important that the names of all the parties appear on the lodgement form, to protect their share.
The landlord must keep a record of the bond payment which includes the date, amount, name and number of the account into which the amount was paid and you must be given a copy of the lodgement form. If the Bond Administrator holds the bond, then you will receive a record of the payment directly from the Department. If the bond is held in a financial institution, the landlord should give you a copy of the lodgement form.
It is an offence if the bond is not paid to the Bond Administrator or a financial institution.
What if the signatories change?
If the ownership of a rented property changes, you and the bond holder must be notified and the signatures changed over. Form 9 (Notice of Security Bond) will notify the bond holder of the full name and address of the new owner or property manager. It must be signed by the new owner and the previous owner.
In situations where joint tenants are named on the lease agreement and one or more decide to leave or is replaced by new joint tenants, with the consent of the landlord, all parties can elect to change the lease agreement and have the bond paid out, then replaced by a new bond.
Alternatively Form 9 can be used to notify the bond-holder of the change of tenants so that at the end of the tenancy, the bond can be paid out to you and the current tenants. The incoming tenant can pay the departing tenant their share of the bond.
Refund of bond money
At the end of a tenancy, bond money will only be paid out if you and the landlord agree, or if a court order is obtained from a magistrate.
If there is no dispute over the condition of the property on handing it back to the landlord, or both of you have agreed how the bond money should be divided to pay for any damage etc, a Form 4 (Joint Application for Disposal of Security Bond) must be signed by you and the landlord and given to the bond holder.
The form should show the amount to be returned to you and/or the landlord and/or to be refunded to the Department of Housing and Works (Homeswest) if you have received bond assistance from the Department of Housing and Works.
Important: Landlords and tenants should make sure the form is filled in correctly before signing it. Never sign a blank or partially completed form. You wouldn’t sign a blank cheque, so don’t sign a blank form!
Agents are required to pay out the bond money within seven days of receiving the Form 4 signed by both parties.
Disputes over bond pay-outs
If a dispute arises over how the bond money should be paid out, you can resolve it by negotiation, or by taking action in the Small Disputes Division of the Local Court nearest to the rented premises.
If you go to the Small Disputes Division and the bond money is still held in the joint account, an Application for Disposal of Bond Money (Form 6) should be completed. You can get this form from the court.
Once the form is lodged, the court will send a copy to the landlord, who has three options:
- agree to settle the dispute;
- dispute your application (the landlord lodges a Notice of Intention to Dispute Application for Disposal of Bond Money (Form 5) within seven days), whereby the matter is set down for hearing before a Clerk of Courts or Magistrate; or
- ignore the notice (the court may then issue an order for the release of the bond after seven days). A landlord may apply to the Small Disputes Division (using Form 6) for disposal of the bond money if you refuse to sign the disposal form.
If a dispute goes to court at the end of a tenancy, the Clerk of Courts/Magistrate will make an order as to how the bond money is to be paid out.
Remember, going to court doesn’t mean you will face high costs.
It is an offence for tenants to stop paying rent with the intention the amount owing will be taken out of the bond.
Paying rent
A landlord must not ask for more than two weeks’ rent in advance before or during the first fortnight of a tenancy. After that, the agreement can provide for rent payments on a weekly, fortnightly, four-weekly or calendar-month basis or any other period as agreed by you and the landlord.
The landlord must not ask for rent until the period covered by the previous payment is finished.
Receipts and records
Receipts for rent paid must be issued by the landlord within three days.
The receipt must show your name as tenant, the date received, the amount paid, the premises and rental period covered by the payment. Real estate agents receiving rent payments must give you a receipt immediately. A receipt is not required if the rent is paid by agreement directly into an account at a bank or other financial institution.
The landlord must keep a record of the rent paid. You should keep all receipts in case there is a dispute in the future about rent still owing.
Rent increases
The laws relating to rent increases vary, depending on what type of tenancy you:
- are in a periodic tenancy, rent may be increased only at six-monthly intervals but you must be given at least 60 days’ notice in writing, with details of the amount of the rise and the day it takes effect. You only have to pay the increase if proper notice has been given. Rent cannot be increased in the first six months of a periodic tenancy, or less than six months after the previous rise.
- rent in a fixed term tenancy cannot be increased during the term of the tenancy unless the agreement says so and it is at least six months since the last increase.
Excessive rent – paying too much?
The amount of rent charged at the start of a new tenancy is generally controlled by market forces, but if you believe the rent is too high you can apply to the Small Disputes Division for a reduction, or to argue against a proposed increase.
The grounds for taking it to court are that:
- since the tenancy began, there has been a significant reduction in the contents or facilities provided with the premises; or
- the landlord was putting up the rent by big amounts to force you out.
If your rent is overdue
Your tenancy may end if you fall behind in paying rent. If a problem arises in making the payments, you should explain your financial situation to the landlord and arrange to pay the arrears in full.
If you’re behind in rent payments, or present a bad cheque, landlords are entitled to follow the procedures described in Service of Notices.
A landlord cannot seize your belongings in return for rent owed.
If you reasonably believe you’re not behind in rent payments, you can remain in the premises while the matter is sorted out by negotiation, or until the landlord applies for an eviction hearing in the Small Disputes Division, where both parties can put their case (see Ending A Tenancy).
A landlord cannot end a tenancy even if you’re behind in rent without a court order.
Additional fees and charges
Generally, tenants should not expect to be responsible for any payments other than rent and bond.
Landlords are not allowed to charge you fees for their day-to-day management of the tenancy. Similarly, landlords are not allowed to charge you a penalty if you breach your agreement. An example of these types of fees may be an administration fee for sending you utility invoices or breach notices.
This does not mean that a landlord cannot request that you compensate the owner of the property where it is shown that you have breached your agreement and that this has directly caused the owner to incur costs that would not have been incurred if you had kept to the agreement.
Before you can be asked to pay a charge, it should be shown that the charge is justified and allowable under the law. If you dispute the charge, you are entitled to have the matter determined by the Local Court.
If you are uncertain about any fees or charges you are being asked to pay, contact the Department of Commerce on 1300 30 40 54 for advice, or to lodge a written complaint.