It has come to light, in a recent review of bond claim results, that over a third of bond claims don’t hold up under pressure.
Anika Legal, a not-for-profit legal service for renters, has analysed data from 147 bond disputes in 2022–23 and revealed that in 39 per cent of the cases where Anika Legal assisted renters, no money was recovered by the rental provider.
Anika Legal CEO and co-founder, Noel Lim, recently commented in an interview with Real Estate Business, that the results of the firm’s research show that in a surprisingly high percentage of cases, bond claims are being lodged on “baseless” grounds.
Moreover, when provided with legal assistance, Anika Legal found that renters were on average able to recover two-thirds of the bond money claimed by rental providers – a total of $1,688.
As a direct result of their findings, Anika Legal are now asking:
Should there be penalties on rental providers for lodging baseless claims?
Infact, one of Anika Legal’s recommendations for creating a more equal bond system includes implementing and enforcing civil penalties for unfair bond claims to deter rental providers from exploiting renters.
In an 11 page report created by Anika Legal, called Broken Bonds, they claim that one in three renters lose all or part of their bond at the end of their tenancy. They further state that a prevalence of rental providers who make bond claims as a matter of course at the end of each tenancy places a financial burden on renters, who may be relying on the return of their bond money to stay afloat. As wait times for Victorian Civil and Administrative Tribunal (VCAT) hearings in recent years has averaged 502 days, their experience is showing that without access to legal assistance, many Victorian renters agree to unfair bond claims just so they can quickly access a portion of their bond without having to deal with VCAT delays.
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Almost half of the not-for-profit’s clients said that as a result of bond disputes, they had trouble meeting the bond requirements of their next rental. Eight in 10 reported that the bond dispute caused them stress and anxiety.
“Unfair bond claims lead to a cycle of disadvantage that can result in homelessness,” Lim said, stressing the stakes of the issue.
“There’s no penalty for a rental provider to make a baseless bond claim, so they’re treating them like free lottery tickets,” he added.
The firm argues that the state also stands to gain by reducing the number of claims at VCAT, suggesting that if 39 per cent of the estimated 23,700 bond disputes that reach VCAT each year are unfounded, with penalties in place, they would likely not be lodged in the first place, leading to savings of up to $14 million in costs.
Download the full report here.
If you would like further information on the above please reach out to your friendly property management team at First National Real Estate Neilson Partners who are always here to help.
