EP. 1212 RESIDENTIAL BOND HACKS NOT TAX

Unlock the secrets of securing your rental bond and maintaining peace of mind with the guidance of Cleo Whitt, a seasoned property management expert. This revealing conversation peels back the layers of residential bonds, providing tenants and landlords with critical knowledge to navigate this often-confusing aspect of renting. From lodging a bond correctly to making sure you get it back in full, Cleo breaks down the essentials, including the pitfalls of using your bond to cover rent and the steps necessary to ensure its return. Whether you're a tenant looking to protect your wallet or a landlord aiming for a smooth transition, these hacks and tips are invaluable.

We take the condition report to task, unveiling its critical role in preserving the tenant-landlord relationship. Through an in-depth discussion, we learn that a thorough ingoing inspection can be a tenant's best defense against future disputes. Cleo sheds light on what constitutes normal wear and tear and why documenting everything is non-negotiable. By instilling proactive habits like addressing damages early, this episode arms tenants with the strategies needed to make moving out as dispute-free as possible. Join us to foster a harmonious end to your tenancy, and ensure you leave no bond money on the table.

Transcript

Speaker 1: 0:01

Residential Bond Hacks with expert property manager Cleo Whitt. Here we're going to talk about residential bonds and the complications about getting them back in the end and what to do around that. So stay tuned, I'm the ringleader. Spicy topic, miss Cleo. Spicy topic bonds.

Speaker 2: 0:42

Yes, it's one of the most typically asked questions when tenants move out how do they get their bonds back? What happens with that whole process?

Speaker 1: 0:51

so I guess, to start from the top, you're gonna rent your property. It's 500 a week. The agents or the owner are gonna ask you for a four-week bond, it's like as a security for the property. So in case you do any damage to the property that's not wear and tear, the bond will protect the owner on that. So that's four weeks. $500 is $2,000. Now people may not know it doesn't sit in the agent's account, it sits with the residential bond board. Have I missed anything? And it gains no interest, got it? So, uh, the interest is a nominal, nominal amount, not even worth considering, and, um, like a couple bucks, isn't it?

Speaker 2: 1:40

I had a tenant that was in a property for like 20 years and, yeah it was, it was like $1.20 or something. So the government gets to enjoy this money. You know, in bonds, yes, they have millions of dollars there and you know the tenants don't get anything other than it just sit there for that time.

Speaker 1: 2:04

Now one thing I'd add the bonds don't have to be topped up. So with a residential bond, if the rent doubles over a 10 or 20-year period, you don't have to top up your bond at any time. The original bond is just fine.

Speaker 2: 2:18

Yes, that's right.

Speaker 1: 2:21

The bond gets paid when you sign your lease. Is that correct?

Speaker 2: 2:26

At the same time as your two weeks that you pay, you also pay the bond. It's all lodged online. Now it used to be PayPal where you signed for it. Now it's all done through a link to the tenant and then they get a unique number that's just for their tenancy and then we add that to our software program that ties that money to that tenant okay, now here's where we, where it gets curly.

Speaker 1: 2:51

So the tenant's been there for one, two, three, five years um. A tenant sometimes starts short paying their rent, um, and they say you can use the bond instead.

Speaker 2: 3:09

Yes, so we usually don't encourage that. The bond is meant for maintenance and repairs or cleaning or damages that might have occurred during the tenancy. It's not there for rent. However, in the instance where we've done a pre-vacate or something and we know the tenant's been a good tenant and they might just be in a pinch and they need to pay another bond and they might only have a week or two, um, sometimes we'll, you know, we'll allow it, we'll consider it and say, okay, well, we'll claim that rent money from the bond because we're not anticipating any issues um and the tenancy, but yes, it's not.

Speaker 2: 3:46

It's not meant for rent to consolidate those last few weeks before you move and something um.

Speaker 1: 3:55

So, guys, if you just tuned in, we're talking about residential bonds today, the hacks, uh, for tenants that they can employ when with with their residential bond. Something that we should mention is that we are not the decision makers, we are the stakeholders, and often it's up to the landlord as to how that bond gets handled and up to the tenant, because it's a stake held on both people's behalf. So agents, I think, often think they have this autonomy over a bond, but it's not really. They're acting on behalf of both these people as custodians, you know, with this bond. So it's delicate, so delicate that if there's not an agreement, off to tribunal it goes. So Cleo with a residential bond. Where do you see this go wrong when a tenant moves out of a property?

Speaker 2: 4:44

Usually when they run out of time for cleaning purposes. That is one of the most contentious points having carpets cleaned even though legislatively you don't always have to have the carpet steam clean now but if they're stained or dirty, you know the ovens, shower grout, all the things that you know you run out of time to clean. At the end of a tenancy those things are usually what a bond would be claimed for. Another thing we find that's a little bit of a hurdle is when an owner wants to move in right away and it doesn't give the tenant an opportunity to remedy anything in the property. If you're an owner and you want to move straight in, for example, tenant moves out today, you want to move in tomorrow.

Speaker 2: 5:32

If there's anything that needs to be negotiated, the property needs to remain untouched and a lot of owners don't know that. So if you go in and you start moving your furniture in and fixing some things or whatever, and then you're wanting the tenant to come back and do something, the bond is actually null and void in the eyes of NCAT because it could be argued whatever During that process the owner's been in the property, they could have damaged something. So if you are wanting bond money from your tenant and you are moving back into your investment. You need to have a bit of a buffer. It's not ideal always, you know, in the perfect world. Yeah, yeah, so that's another thing.

Speaker 1: 6:14

Well, everyone's working to a timeline so it gets tight. And I can see what you've spoken about, mum the oven cleaning and the shower grout and the carpet cleaning. Often it's out of scope for people where these good oven cleaners that we employ are freaks of nature and they get it beautiful. And same with carpet cleaning they are, and even with the carpet cleaners we use, compared to when someone hires it from Bunnings, the carpet cleaner from Bunnings, and tries to do it themselves. So often people go. You know what. I'm just going to leave the real hard work out of scope to get the agent to handle it. It'll be probably cheaper in the end and less work.

Speaker 1: 6:59

So, cleo, one thing that I do find with landlords is they feel very righteous around about that bond. Um, I do have to say and tenants often won't know this, but we really are often sticking up for the tenant, for the, for the uh, the, the diplomatic right um of of the tenant to say you know, hey, uh. No, mr landlord, you can't, we can't say that or do that or no, mr landlord, we can't say that or do that or no, mr Landlord, we can't do that or say that in relation to the bond. No, mr Landlord, we can't do that. So often, I think, a tenant sees us pulling them up and saying you know, this is what you have to do. But I hear it all the time with a great property manager, you know reading the riot act to the landlord as well, saying hang on a sec, there's a line we have to walk here.

Speaker 2: 7:50

Make sure you don't step over it yeah, I often say it's not your money like it's a harsh way to describe it but it's the tenant's money. Um, at this point, and if you are wanting to make a claim, it has to be a legitimate claim and we run through all um. You know the scenarios and where an owner could make a claim. It has to be a legitimate claim and we run through all.

Speaker 2: 8:09

You know the scenarios and where an owner could make a claim and sometimes they don't agree with us and we do that for the tenant a lot. We also give the tenant an opportunity well in advance to look through the things that we will be looking for at the final inspection. So they do get their bond back right away because we know most tenants are moving into another property. They need that money. It's a lot of money in four weeks. So we tend to say you know, if you've got a professional cleaner, ideally we can come in with the owner and be very, very quick. You might get your bond within 48 hours. That's the quickest timeframe you can get it if we release it. But if you've got to go back and there's little niggly things, you know it can take up to a week or two, you know, while both parties are happy. So in that respect, yeah, but yeah, we do protect that money for the tenants and we do also, you know, help the owner if their property's being mistreated, for sure.

Speaker 1: 9:07

Step through. So there's tolerance towards wear and tear, like if you know if the carpet's a little bit worn over a 10-year period or you know if there's wear and tear natural wear and tear that will be considered and most part accepted, but it's when there's sort of malicious damage and stuff. That's when it can come across the bond. Now, something that I we the biggest bond hack from today that I want to talk about for people to cover their bums is the ingoing condition report. It is the holy grail, it is the Bible of moving out. Can you tell us about that?

Speaker 2: 9:44

and why it's important in relation to the bond yeah, so a property manager typically looks at the photos. Um, when a tenant gives notice and you're getting it's getting close to them moving out, we'll source our network. We'll look at the photos that we took usually about 200 photos at the start of their tenancy, become familiar with it. We take the report, like you said, the, the holy grail, the you know dead sea scroll, and we'll take it with us to the property and we'll compare. So wherever it said you know a little stain or you know the walls were brand new, we'll compare those comments with photos, and tenants get two copies of the inoing at the start so they can keep one copy for when they do move out. And then they too can go through and check everything to make sure that, apart from wear and tear, everything is the same. Um, that can save you a lot of time, um, especially if you're unsure.

Speaker 2: 10:41

If oh did, was that blind broken? I can't remember if that panel had fallen off during my tenancy. If it was later, you can always. Can't remember if that panel had fallen off during my tenancy. If it was later, you can always check um and have that conversation with your property manager in advance. I've had tenants that have looked at the condition report and gone oh, you know what I've done this I need to fix that. Can we get a handyman? You know contact number, and then they'll get that done. And then when keys are handed over, it's seamless and very quick because we we've already sorted that out, you know I think you've nailed it.

Speaker 1: 11:12

Guys with bonds, be careful. Big lesson out of today is that ingoing report. Make sure you uh, you kept a hold of it. Make sure it's done properly by the agent or the landlord. Make sure that when you move out, you pull that little puppy out and start comparing before and afters to make sure you can get it as close as possible considering wear and tear.

Speaker 2: 11:37

Hope that helps some people moving out at the moment.

Speaker 1: 11:41

Thanks, Cleo. Cheers have a great day.