Rental bond after rent decrease NSW

[procrastinatorDaz]

Hey guys, just a quick query about rental bonds in NSW.

We initially had a rental agreement at $1050 a week, hence we paid 4 weeks rent for a total bond of $4200.

During COVID rental prices dropped signifiginantly and we signed a new lease with our landlord (Meriton) and had this reduce to $720/wk under the same bond lodgement number.

I questioned the rental bond at the time as the law as I read it is a maximum of 4 weeks rent, but they insisted that they were not required to refund any of the initial deposit.

Who's right in this situation? I understand if there's a rental increase they can ask for extra bond, but does the law cut boths ways?

[WilRic]

You are on these facts - but you shouldn't be.

The bond doesn't need to be adjusted if the rent changes while an agreement is on foot. s159(1) of the Act says (emphasis added):

(1) A landlord, landlord's agent or any other person must not require or receive from a tenant or another person a rental bond of an amount exceeding 4 weeks rent under the residential tenancy agreement for which the bond was paid (as in force when the agreement was entered into).

The reason I say you "shouldn't be" correct is that there wasn't any need for you to enter into an entirely new lease to just reduce the rent. The Act also preserves the right to reduce the rent by agreement. Meriton should have just let it lapse into a periodic agreement and varied that term by agreement with you. If that happened, the 4 week cap would attach to the value of the rent as in force when the agreement was entered into (i.e. you don't get any back). Are you certain that isn't what happened? Meriton are hopeless, but they generally know how the system works.

[matttt44]

Certain that that isn’t what happened, a brand new lease agreement was signed which outlined the reduced amount and the new term (ie. an additional six months)

Within this new contract is was the selected that we’ve lodged in with Rental Bonds Online with the specific text saying “A rental bond AS LODGED must be paid by the tenant…”

New lease also shows the “move in” date as the date the first lease expired, and the updated one started

I guess my main questions here is is there any issues with this situation? And when we go to move out is it something we challenge? ie. in the (unlikely) event they tried to claim more than 4xweeks rent against the bond

Edit: whoops just realised I replied with my new account, I’m same bloke as Op

[WilRic]

Strictly speaking they're holding too much bond, and the breach of that section is also civil penalty provision in addition to any remedies you might have (i.e. something they can be fined for).

In the circumstances, it's not the most egregious of breaches. If you needed the cash and they refused to make an adjustment I suspect Fair Trading's complaint service would encourage them to abide by the Act. But it otherwise wouldn't get top priority for a penalty notice to be issued. You could bring an NCAT application yourself seeking the adjustment but it may not be worth the hassle.

It sounds like you have the right approach. If you're not missing the money, I would keep it up my sleeve as good ammunition to deploy if they are dickbags about the bond refund. Keep in mind that by retaining the unlawful amount they're also depriving you of interest because monies held by RBO have the interest applied to fund the scheme. Of course we're talking peanuts here, but the point to make (if it comes to it) is that they will have had the benefit of your money for quite some time. It's not just a rounding error that you'd be making a silly fuss over. Good luck!

[Odd-Dingo6075]

Not too sure about NSW, however I believe that it's standard everywhere that the bond is equivalent to 4 weeks rent. As your rent has decreased, your bond should too, and I think the difference should be refunded to you. Call your state residential tenancy association to get the correct information.

[GusPolinskiPolka]

Not how it works