How to increase the bond after a rent increase - Real estate industry bulletin 255
20 July 2022
How to increase the bond after a rent increase
While you can ask tenants to ‘top-up’ their security bond following a rent increase, it’s important to know what is legally allowed. There are essentially four steps to increasing a bond.
Step one: increase the rent
You can increase the bond during a tenancy after you or the landlord increased the rent using either the Form 10 for when rent is not related to the tenant’s income, or the Form 11 for when the rent is based on the tenant’s income.
A rent increase cannot occur less than six months after either the tenancy started or the rent was last increased. You need to provide the tenant with at least 60 days’ written notice of the intended rent increase. Additional information on how to increase the rent and the forms to use are available on our ‘Rent increases’ webpage.
Step two: increase the bond
Following a lawful rent increase, you can issue the tenant with written notice to ‘top up’ the security bond. Unlike a rent increase, there is no specific form you must use to provide the written bond increase notice.
The written notice must state the amount of the increase and the date it must be paid. This date:
- Must be at least 60 days after the date the notice is given to the tenant; and
- Cannot be given less than six months after the tenancy started or the bond was last increased.
The increase in the bond amount depends on the weekly rent. If the rent payable under an agreement is no more than $1,200 per week, the maximum security bond can be equal to four times the weekly rent. To ask for more than four weeks’ rent as a bond is a criminal offence.
If the rent is more than $1,200 per week, there is no limit on the bond amount.
Rent and bond increase notices cannot be issued at the same time. A bond increase notice must be issued after the increased rent is payable.
Step three: give the tenant a receipt
After receiving a security bond payment, whether in full or part, you must give the person making the payment a receipt for the payment. The receipt must state the date the bond was paid, the name of the person making the payment, the amount paid and the premises it relates to.
Step four: lodge the funds with the Bond Administrator
Within 14 days of receiving the additional bond, lodge a variation of security bond with the Bond Administrator via the BondsOnline system as an eTransaction.
The Bond Administrator cannot accept increases in bond amounts greater than four weeks’ rent (for weekly rents of $1,200 or less) or before the date of the rent increase. In both instances, the funds will be rejected.
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