The death of cash: How to rent without ever paying a bond


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Stumping up a rental bond can be a big ask for tenants but a new solution lets renters hold onto precious cash without compromising landlords' security.

Renting may be more affordable than buying a property but for many tenants drumming up the rental bond is a major financial challenge.

For decades bonds have been set at around four weeks' rent. That may have been fine when rents were measured in shillings and pence but with weekly house rents averaging $549 nationally tenants may need to scrape together over $2000 just to secure a lease.

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It's a big chunk of cash and, along with zero return on their money, tenants can't normally access bond money if it's needed in an emergency.

Worse still, while some states allow bonds to be transferred between properties, hold-ups can occur if the landlord makes a claim. When that happens, tenants who can't fund a new bond can be left with no choice but to couch-surf until the money is released.

However, there is now a low-cost alternative that can put money back in tenants' pockets.

Pay a fraction of a regular bond

With the backing of landlord insurance specialist Terri Scheer, the fintech company Traity has launched Trustbond, a surety that costs a fraction of traditional rental bonds.

On a bond of say, $1500, the Trustbond fee could be as low as $190.

The Trustbond follows the term of your lease up to a maximum lease of two years, and a 50% discount applies if the lease is renewed, with a third renewal at the same property coming in free of charge.

Eligibility hinges on trustworthiness

From a landlord's perspective, the Trustbond provides the same level of security as a regular bond though with a very different approach.

"Trustbond is based on the premise that good online citizens will also be good tenants," says Carolyn Parrella, executive manager at Terri Scheer Insurance.

To this end Traity builds a TrustScore for each applicant using online data including networks, ratings and reviews from Facebook, Twitter, LinkedIn, Airbnb, eBay and Uber. A TrustScore of 70 or more is needed to be eligible.

If you don't head online often, Traity will consider past rent reviews or recommendations from friends as a guide to your trustworthiness.

The downsides

Unlike a rental bond, the money spent on a Trustbond is not refundable. So if you move frequently, the cost can add up.

At present Trustbond is available only in South Australia.

The system will be rolled out to other states in coming months but until then it's still a case of forking out a month's rent in advance and hoping those red wine stains in the dining room don't leave you scratching for a fresh supply of bond money when it's time to move on.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.