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A company has landed in hot water after the Supreme Court ruled that its rental product offerings would offend residential tenancy laws in NSW.
The Supreme Court has ruled that the products from ZeroBonds, a company offering an alternative to upfront rental bonds, do not operate in compliance with NSW tenancy laws.
NSW Fair Trading raised concerns about ZeroBonds’ model in 2024, warning the company that its approach to rental bonds was not compliant with the law.
The Supreme Court would later find that ZeroBond’s company model, which requires tenants to make a non-refundable payment instead of a bond, was in violation of legislated protection for renters from unauthorised fees under the Residential Tenancies Act 2010.
As part of the ruling, the court would confirm that the company’s Bond Replacement Product and Bond Reversal Product were not in line with the Residential Tenancies Act.
NSW rental commissioner, Trina Jones, said that “payments of both a non-refundable application fee and a percentage of the bond, as offered by ZeroBonds, are not compliant with the law”.
Although residential bonds are not mandatory, if one is collected, it must be lodged with the NSW Rental Bond Board, which is free of charge and offers protections under the Residential Tenancies Act.
While bond loan products enabling tenants to borrow funds for paying a bond are legal, these offerings include fees and interest rate charges that can raise costs over time.
In comparison, bond replacement schemes like ZeroBonds, which require payments exceeding those specified in the Residential Tenancies Act, are not permitted.
Since concerns were first raised about ZeroBonds in 2024, a dedicated Rental Taskforce was established within NSW Fair Trading to investigate and address breaches of tenancy laws.
“The Rental Taskforce within NSW Fair Trading is focused on protecting tenants and ensuring compliance with rental laws, including taking action against unlawful fees and misappropriation of funds,” Jones said.
The NSW government is also set to implement a Portable Rental Bond Scheme in late 2025, allowing tenants to transfer their bond between properties without needing to pay a new one upfront.
Jones said the court’s decision clarified that companies “cannot sidestep tenancy laws” with financial products that do not adhere to the law.
“Rental bond processes should be fair, transparent and lawful, so we welcome this decision which is a win for tenants who won’t be burdened with unnecessary and unlawful fees,” Jones concluded.
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