HOT TIP – Renting / How Do Bonds Work?

Whether you are looking for a home to rent, or looking for someone to rent out your home, it is important to understand the basics of a “bond”.

What Is A Bond?

A rental bond is form of security money, which is paid by the tenant before they move in, in case they breach their tenancy agreement. All bonds have to be lodged with Fair Trading.

Majority of the time,  tenants do the right thing and get their bond money back at the end of their tenancy. However, sometimes things get broken, or not taken care of – the bond money usually covers this.  There is cases though, where the bond does not cover the damage and rent owed by a tenant.

Landlords: If this risk concerns you, then consider taking out landlord insurance.


How Much Is the Bond?

The following excerpt is taken from the NSW fair trading website, as they have perfectly broken it down :

” While not compulsory, taking a rental bond is highly recommended unless there is a good reason not to.

Be aware that a rental bond:

  • cannot be an amount more than 4 weeks’ rent. This is paid at the start of the tenancy and applies to all NSW rental properties, whether furnished or unfurnished. Higher bonds cannot be charged for tenants with pets, children or for any other reason. Also, you cannot request or receive additional bond payments (‘top-ups’) during the tenancy.
  • must be in money, not in a form such as personal goods or a written guarantee from the tenant’s friends or relatives. The only exception is for Tenancy Guarantees issued by Housing NSW. These guarantees (of up to $1,000 over and above any bond paid) help those with a limited or poor rental history to rent a place in the private rental market.
  • does not need to be paid before signing the tenancy agreement. This includes applicants for the tenancy and those who have paid a holding fee. The tenant may decide to transfer the bond into a bank account before signing the tenancy agreement but they are not obliged to do so.
    • However, this does not prevent a landlord or real estate agent from requiring the tenant to provide evidence that the rental bond has been deposited with Fair Trading before the tenancy agreement is signed.
    • If the tenant is using Rental Bonds Online, they must lodge the bond with Fair Trading prior to the agreement being finalised.
  • is for the whole tenancy: if there is more than one tenant, you cannot take a separate bond from each of them.
  • can be paid in instalments if you as the landlord allow this. Learn more in the ‘Bond instalments’ section below. “



What Is ‘Rent In Advance’?

Rent in advance is different to a bond. At the beginning of the tenancy agreement, the tenant can be required to pay the first 2 weeks rent. This just means that the tenant is paying their rent in advance, and wont have to start paying their rent until two weeks have passed (since tenancy start date).



If your a tenant, your landlord or agent is meant to give you a bond form at the end of your tenancy. Alternatively, you can find it here: