The bond

Most landlords require, as a term of the tenancy agreement, that you pay a bond at the start of the tenancy. The bond is a form of security for the landlord against any losses they might suffer as a result of a breach of the agreement by you. The amount of the bond must be no more than four weeks’ rent: section 159(1). The bond does not limit your liability (so if at the end of your tenancy you owe the landlord more than the bond, they can claim the bond and proceed against you for the rest).

Landlords and agents may ask you to pay the bond to them, or pay through NSW Fair Trading’s Rental Bonds Online facility (you cannot be made to use Rental Bonds Online: section 157A(4). If you pay the landlord or agent, you should do so when you sign the tenancy agreement or shortly afterwards; most landlords will require that the amount be paid in full (though they may agree to it being paid by instalments). The landlord or agent must then lodge the bond with NSW Fair Trading. Landlords must deposit bonds paid in full within 10 days of payment; agents are given until 10 days after the month in which you paid the bond (Residential Tenancies Act 2010(NSW) section 162). Where paid by instalments, other timeframes apply (see section 162).

When the bond has been deposited, NSW Fair Trading will send you a receipt. If you haven’t received a receipt, give NSW Fair Trading a ring to see if the bond was deposited.

If you pay through Rental Bonds Online, the agent or landlord may ask you to pay before you sign the tenancy agreement: section 159(2A). (If they subsequently refuse to enter into a tenancy agreement with you, you can use Rental Bonds Online to claim the money back.) If you pay through Rental Bonds Online, the bond is paid directly to NSW Fair Trading.

This is new

The Rental Bonds Online facility commenced 2015. Previously, all bonds were paid to landlords and agents, and lodged by them with Renting Services.

Landlords and agents are prohibited from asking for additional forms of security, such as additional bonds for pets or guarantees from persons who are not party to the agreement. Some agents and landlords try to get around this prohibition by asking other persons, such as the tenant’s parents, to sign the agreement as if they were party to it, even though it is understood that they will not reside at the premises. These sham arrangements are unlawful (section 219(2)).

There is one exception to the prohibition against additional securities: landlords and agents are allowed to accept ‘tenancy guarantees’, which NSW FACS Housing and certain other social housing providers make available to eligible persons looking for private rental housing.