This article is from the Australian Property Journal archive
A COMMUNITY legal service that helps renters is calling for changes to Victoria’s bond disputes system, after it found that 82% of claims made by landlords against home renters that went through the Victorian Civil and Administrative Tribunal (VCAT) ended with lower awards than claimed – and in the case of 39%, none at all.
Anika Legal’s Broken Bonds report made the findings from 443 VCAT cases heard over the entirety of both 2022 and 2023.
“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,” said Noel Lim, chief executive of Anika Legal.
“There’s no penalty for a rental provider to make a baseless bond claim, so they’re treating them like free lottery tickets.
“This is clear exploitation of renters, which is costing them two weeks’ pay on average, and negatively impacting their mental health.”
Anika Legal’s recommendations in light of the findings include for the implementation of a portable bond scheme to alleviate financial burdens on renters and streamline the rental process; the adjustment of the RentAssist Bond Loan scheme eligibility criteria to ensure equitable access for all renters; and the enforcement of civil penalties for unfair bond claims to deter rental providers from exploiting renters.
The portable bond scheme is part of a legislative reform package currently being considered by the Victorian government. Changes to RentAssist would not require legislative reform, while Anika Legal is recommending further legislative reform beyond the Housing Statement for civil penalties to be introduced to address repeated misconduct by rental providers who consistently make frivolous bond claims.
“The prospect of being liable for a small number of penalty units (around $1,000) for unsubstantiated claims would drastically reduce the number of bond disputes initiated by rental providers overnight,” the report said.
Nearly two out of five cases in which Anika Legal assisted renters with bond disputes ended with no money being recovered by the rental provider, suggesting the claim was baseless, it said. According to Anika Legal, 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”.
Wait-times for VCAT hearings within the two-year period averaged 502 days.
The report also showed that 84% of respondents to a survey conducted by Anika Legal reported feeling “stressed” and “anxious” about the bond dispute, and 43% reported that the bond dispute impacted their ability to pay the bond for their next rental home.
According to the survey, 14% reported not fighting the rental provider’s claim as they needed the rest of the bond back.
Renters that were provided with legal assistance were able to recover two-thirds of the bond money claimed by rental providers – $1,688 on average, or the equivalent of two months’ worth of groceries.
“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,” Lim 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. Until this is meaningfully addressed, the system will not work for renters across a range of tenancy issues.”
In 16% of our Anika Legal’s resolved cases, the rental provider withdrew their claim as soon as it was challenged, the firm said. In a further 37% of cases, the matter was resolved via negotiation on the renter’s behalf.
