Bond cover could replace cash bonds, saving renters thousands

Written by Anna McGraw, prepared by Holly Parkinson.

In Australia, there is more than $4 billion tied up in rental bonds, but Australian bond cover provider, Snug, plans to replace bonds with ‘bond insurance’.

Snug’s bond cover lets renters get their bond back in exchange for a small fee, which they say could potentially cost ten times less than regular bonds, saving renters thousands.

According to Snug’s website, bond cover is insurance for rental properties and, like regular insurance, damages and cleaning fees can be put through as claims by the landlord against tenants.

However, this controversial plan has Queensland’s Shadow Minister for Housing and Public Works, Michael Hart, concerned.

“These type of things need to be clearly black and white and less grey so people clearly know what their responsibilities are and what may happen to their bond if they break those responsibilities,” says Mr Hart.

Snug says if tenants can’t afford to pay claims, they’ll cover the cost, but that will affect the renter’s record indefinitely, which also has Mr Hart on the fence.

Currently, tenants who have had issues or disputes can be put onto a ‘blacklist’ tenancy database, TICA, potentially making it difficult for them to rent.

“I have some concerns about what would happen if suddenly people had a bad reputation,” says Mr Hart.

Renters say bond insurance would be easier, but government are still unsure

Brisbane resident Alex Cabatwando, 27, has been in the rental market since 2012.

Although Mr Cabatwondo lived in a house with two other people, splitting the $500 rent between them, he still had to fork out a hefty amount to cover the bond for the property.

Mr Cabatwondo worked a retail job at the time and said finding the money for his bond was difficult.

“For that particular lease the bond was two grand, which was $667 each we had to pay upfront,” he said.

“If you’re just on a retail casual wage it is extremely difficult to save up.”

After finding out about bond cover, Mr Cabatwando said he’d definitely prefer it over regular rental bonds and says it would be great for all renters, especially young people.

“It’d be a lot easier to manage cost-wise,” he said.