Bond. Rental Bond.

Bond. Rental Bond.

They say there are five great stressors in life. 

*Death of a loved one

*Divorce

*Moving

*Major Illness

*Job Loss

In all the research I have done for this blog, “Moving” is up there in either the number two or three category.  Before major illness. Really?  Yes really. 

No matter, what our best intentions are. No matter how much we kid ourselves that it’s going to be an amazing “new beginning” it is always horrible.  Really, really horrible

Lana from News Website MamaMia “I really wanted to write a post about the upside of moving, about the cleansing and liberating feeling of decluttering your home.  About the catharsis involved in wrapping everything you own in butcher’s paper so that you can put it in a box and then take it out of the box and unwrap it 2 kilometres later.  I really wanted to write it.  But I didn’t because I couldn’t.  I like to keep things honest here.”

There are so many factors at play that contribute to the stress of moving.  One of those huge factors is the issue of Rental Bonds. 

Currently there is approximately $4 Billion Australian Dollars tied up in Rental Bonds. 

Each state has different laws governing the process, but the basic principles are the same.   

Bonds generally equal one months’ rent and are held by state government controlled rental boards until the cessation of the lease.

State governments earn interest on the bonds which is used to pay for support services for tenants including loans for some who can’t afford to pay for an upfront bond.

Research by comparison website finder.com.au found people aged under twenty-four were most at risk of losing all or some of their bond, with the top reasons due to unpaid rent or water bills, unpaid fees for breaking the lease early or damage caused to the property.

Disruptors to the market like snug.com are bringing possible alternatives to the market. Snug is a surety bond designed to transform the rental market by freeing up $4 billion worth of rental bonds.

“With 2.5 million renters across Australia, it’s time to recognise good renting,” says Justin Butterworth, Founder of Snug.

“The current cash bond system is completely outdated, and the resulting liquidity and opportunity cost for renters is astronomical,” Mr Butterworth said.

Although this is still a fairly new and untested process.  If their website is to be believed, they certainly paint a more relaxing picture. 

Their Vision Statement says their aim is 

“To create better rental relationships . We’re bringing together owners, property managers and renters on a more trusting and authentic basis. Snug sets owners up for success and helps renters shine.”

 

Certainly sounds good…. Very snuggly and comfortable and cosy. Hence their name. 

Justin says, we could be investing our money in so much more.  “BondCover provides the necessary protection to owners, but in a way that doesn’t lock down renters’ precious cash for no good reason – a win-win for all parties. And imagine the returns if renters had invested $4 billion in the Sydney property market, paid off debt, or invested in Amazon shares over the past five years instead!”

“We believe rental bonds are a tax on renters to pay for the rental system.”

However, tenants advocates, while recognising that the rental market is already unaffordable for some, said bond cover is really just asking tenants to pay a company an annual fee to access their own money. 

I guess it’s a case of wait and see. If it works, it could be one of the most dynamic game changers to the Property Market in some time. 

Watch This Space…..

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