Tenants are required to put up a security deposit at the time of renting a property. The amount of the deposit can range from one month’s rental to up to 10 months rental depending on the city one resides in. The security deposit remains locked in with the landlord during the period of tenancy.
While most of the landlords refund the security deposit within a reasonable period of time of the termination of the tenancy, there are times that it has taken the tenant more than a few months to recover the deposit from the landlord. In a few cases, he hasn’t received it at all.
Moreover, if a tenant moves from rented accommodation to another one, he is required to put up an additional deposit with the new landlord even before he has got the previous one back. While landlords take security deposits to protect themselves against losses in the event of a default by the tenant, the security deposit at times has become the source of strife between the landlord and the tenant. This could be due to unauthorized deduction or a delayed refund by the landlord.
Hence, there is a growing trend of both the landlords and the tenants moving towards using rental bonds as a replacement for the security deposit.
A rental bond is a guarantee favoring of the landlord that the tenant will fulfill his/her obligations under the tenancy agreement. It replaces the security deposit & covers unpaid rent, lock-in period if any, damages to the property over fair wear & tear, and unpaid bills as set out in the lease agreement. It works for the landlord as the bond gives them access to credit verified & assessed tenants backed by an institutional guarantee.
It works for the tenant as well!
The rental bond does away with the need of a security deposit thus enabling the tenant to utilize the amount of the deposit for things that are more important to him. The tenant just has to pay a fee – a fraction of the security deposit to the surety bond company. A rental bond also helps a tenant shift from one rented property to another as it does not lock in incremental funds. Further, the unexpired portion of the rental bond can also be shifted to the new property thus helping the tenant save on guarantee fees if there are no existing claim on the current bond.
Currently, when a tenant shifts from one landlord to another, he has to start working on the process of building trust with the landlord all over again. However, with a rental bond, the tenant can carry the benefit of a good tenancy track record at his previous tenancies to his next tenancy. A good tenancy behavior establishes the credentials of the tenant entitling him to discounts on guarantee fees. Being a good tenant, he will be also sought after by the landlords thus enabling him to get preferred tenancy terms
Rental Bonds provide the landlord with a credit-verified and assessed tenant backed by an institutional guarantee. It helps address the issue of lack of trust between landlords and tenants. Effectively, the bond hastens the process of building trust between the two parties. This is Trust Simplified!!
Getting a rental bond is simple & easy. It’s completely online & takes only a few minutes. All that a prospective tenant has to do is to go online and fill in the necessary details for the due diligence as required by the rental bond company. Once approved, the bond is issued immediately as soon the tenant has paid the guarantee fees.
With increasing acceptance, Rental bonds are gradually bringing about the desired change in renting behaviour amongst the landlords as well as the tenants. Rental Bonds are clearly the way of the future as they help good tenants save on liquidity, get preferred tenancy terms from landlords while at the same time providing him with ease of mobility between properties. Over and above everything else, rental bonds are bringing in probity into every rental transaction.
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