Landlords accused of making 'baseless' bond claims to fleece renters

Anna Houlahan
Updated July 4 2024 - 7:45am, first published July 3 2024 - 3:33pm

A community legal centre has accused landlords and real estate agents of using renter's bonds as "free lottery tickets" after a large number of bond disputes were deemed baseless.

The Broken Bonds report from Anika Legal in Victoria suggested renters, faced with cost of living pressures, were agreeing to unfair claims in order to access a portion of their bond without facing Victorian Civil and Administrative Tribunal (VCAT) delays.

Anika Legal CEO Noel Lim said rental provider are treating baseless bond claim like free lottery tickets. Picture by Shutterstock
Anika Legal CEO Noel Lim said rental provider are treating baseless bond claim like free lottery tickets. Picture by Shutterstock

"Rental providers and their agents are making baseless and inflated bond claims as a matter of course to get as much income out of their tenants," Anika Legal CEO Noel Lim said.

"There's no penalty for a rental provider to make a baseless bond claim, so they're treating them like free lottery tickets," he said.

Regional housing prices outpace metropolitan areas as they soar to record highs.

The 2023 Young Australian of the Year nominee said this was a "clear exploitation of renters, which is costing them two weeks' pay on average".

Almost 40 per cent of claims deemed 'baseless'

Landlords received an average of $1,688 less from their renters' bond when the claim was challenged by the legal centre, the report analysing 147 cases from 2022 to 2023 found.

Almost 40 per cent of bond disputes handled by the community legal centre were resolved with no money going to the landlord.

This "suggested the claim was baseless", the report said.

"If the same percentage of the estimated 23,700 bond disputes heard by VCAT each year are baseless, then the Victorian government is spending $14 million each year in VCAT costs for cases that should never have been brought in the first place," the report said.

Anike Legal CEO Noel Lim. Picture Australian of the Year Awards
Anike Legal CEO Noel Lim. Picture Australian of the Year Awards

Renters waited an average of 502 days for VCAT resolutions in Victoria, the report found.

Mr Lim said clients of the legal centre were also suffering from negative mental health effects from the stressful claims process.

"Almost half of Anika Legal's clients facing a bond dispute had their ability to pay their next bond impacted. Unfair bond claims lead to a cycle of disadvantage that can result in homelessness," he said.

"The failings of the bond system are characteristic of the broader tenancy system's failure to address the power imbalance between rental provider and renter."

Calls for penalties 

The Broken Bonds report recommended a number of strategies to alleviate pressure on renters.

It called for enforcement of civil penalties for unfair bond claims to "deter rental providers from exploiting renters".

It also suggested the implementation of a portable bond scheme in Victoria to ease financial burdens on renters and streamline the rental process.

The Victorian Civil and Administrative Tribunal in Melbourne. Picture Morgan Hancock
The Victorian Civil and Administrative Tribunal in Melbourne. Picture Morgan Hancock

Portable bonds allow renters to transfer a bond from their old rental property to a new rental property. NSW committed to designing and implementing a comparable scheme in June 2023.

The report also called for an adjustment to Rent Assist eligibility criteria to ensure equitable access for all renters.

The Australian Landlords Association and VCAT were contacted for comment.

Anna Houlahan

Anna Houlahan

Journalist

Reach out with news or updates to anna.houlahan@austcommunitymedia.com.au