West Australian renters could be allowed to transfer their bond between properties and earn interest while it is held, under proposals put forward by the McKell Institute’s WA branch.
The think tank is urging the Cook Government to introduce a portable bond scheme, following similar moves in Victoria and New South Wales. South Australia has also funded such a scheme.
Under the proposal, tenants would not need to find thousands of dollars for a new bond before their previous one had been returned. At Perth’s median advertised rent of $750 a week, a standard four-week bond is about $3,000.
The existing bond is generally returned after a tenancy ends, subject to any claims relating to the property. The institute said having to finance a second bond in the meantime could make it harder for people to move house or relocate for work.
“For many West Australians, moving for work or a new home means finding thousands of dollars for a new bond while the old one is still tied up,” McKell Institute WA executive director Jessica Bukowski said.
“The double bond is an up-front barrier that makes it harder for people to move for work, and to move closer to the jobs and communities they want to be part of.”
The institute’s Make it Portable report said more than 60,000 tenancies ended in WA each year, with the typical lease lasting less than two years. It said rental prices had risen by 6.9 per cent a year since the Covid-19 pandemic, increasing the amount tenants needed to find for a bond.
Proposal would allow interest to be earned on rental bonds
The McKell Institute is also calling for the bond payment system to be modernised so renters could earn a return while their money was held by the government’s Bonds Administration.
It modelled potential returns on a $3,000 bond of more than $5,000 if invested in an option comparable to a conservative superannuation fund, or $14,000 through a higher-risk option.
At present, landlords and real estate agents pass bonds on to Bonds Administration. The institute said tenants should be able to pay the money directly and receive what it described as a renters’ dividend.
“A renters’ dividend would return it to the tenant, and give them something to show for their years in the rental market. WA could be the first state to deliver it,” Ms Bukowski said.
The proposal has received support from the Real Estate Institute of WA. Its president, Rob Mandanici, included a bond portability scheme in the organisation’s pre-budget submission, suggesting tenants could transfer their bond between eligible properties for a small fee.
WA Commerce Minister Tony Buti was approached for comment.
