When reviewing the rent on an investment property, there’s another detail owners shouldn’t overlook: the rental bond.
It’s easy to focus on the new weekly rent and the additional income it will generate, but a rent increase is also a good time for your property manager to check whether the bond should be increased.
The bond provides financial security for an owner if a tenant breaches their tenancy agreement, subject to the applicable rules for claiming against it. Keeping it aligned with the rent is a small but important part of managing your investment properly.
Why Does the Bond Need Reviewing?
In Queensland, the maximum rental bond for a standard residential tenancy is generally four weeks’ rent.
If the rent increases, the bond may also be increased to reflect the new rental amount, provided the legislative requirements are met.
For example, if your property rents for $600 per week, a four-week bond is $2,400. If the rent increases to $630 per week, the corresponding four-week bond would be $2,520.
That leaves a potential $120 difference.
It isn’t a huge amount in this example, but over time, if rent increases are processed and the bond is overlooked, the bond held may no longer reflect four weeks of the current rent.
What Are the Queensland Bond Increase Rules?
Under Queensland tenancy legislation, a bond increase is subject to specific requirements:
- Timing: At least 11 months must have passed since the tenancy started or the last bond increase, as applicable.
- Written notice: The tenant must receive written notice stating the increased bond amount and the date by which it must be paid.
- Payment timeframe: The tenant must be given at least one month from receiving the notice to pay the additional amount.
- Lodgement: Any additional bond money received must be lodged with the Residential Tenancies Authority (RTA) within 10 days.
The total bond must not exceed the legal maximum. A bond increase also needs to comply with the applicable tenancy agreement and legislation.
You can find further details on the RTA’s rental bond guidance.
The Importance of Following Through
A rent increase involves more than sending a notice to the tenant and updating the rental amount in the management system.
The property manager should also review the bond, check when it was last increased, determine whether a further increase is permitted and, where appropriate, arrange the required notice and lodgement.
It’s another detail that can easily be missed if rent reviews are treated as a one-off administrative task rather than part of the ongoing management of the property.
Owners should be able to rely on their property manager to keep track of these details and ensure the relevant records are up to date.
My Advice to Owners
When your property manager reviews your rent, it’s worth ensuring the bond is reviewed at the same time.
The additional amount may be relatively small, but keeping the bond appropriately aligned with the rent is part of maintaining the financial and administrative side of your investment.
Good property management is often about getting the smaller details right, not just the obvious ones. Regular rent reviews, accurate records and following through on the requirements all contribute to looking after your property properly.