A property industry body has called for clarification around NSW’s new digital bond transfer system, saying it could complicate claims and shift risk onto property managers and investors.
The Property Investment Professionals of Australia (PIPA) has argued that the NSW Smart Rental Bonds scheme could create cash flow issues and administrative pressures for property managers and landlords.
Last week, the NSW government announced it had begun testing the new process to allow tenants to transfer their existing bond to a new property, saving them thousands.
Tenants will be able to pay a $25 fee to transfer their bond digitally to a new property, avoiding the need to wait for their previous bond to be refunded.
In the event of issues, the government said that if a landlord files a claim for damages, it will pay upfront and recover the costs from the tenant.
PIPA NSW board director, Veronica Morgan, said while the government assured landlords that they wouldn’t face any risk from the scheme, the reality may look different.
She argued the process may create a barrier to landlords’ access to bond funds to pay for cleaning, repairs, and trades, often required within days of a tenant vacating
“If this system introduces delays, additional verification steps, or disputes tied to a third-party payer (the government), that could create cash flow pressure and administrative friction,” she told REB.
“There’s also a risk that recovery becomes more complex if the government, rather than the tenant’s own money, is effectively fronting the claim.”
Morgan also said, in circumstances where it applied, property managers could end up carrying much of the administrative burden.
“Any delays, additional verification steps, or uncertainty around who is paying (tenant vs government) will fall on them to manage, often under tight timeframes between tenancies.”
She said that if the process wasn’t seamless, it would risk increasing the workload, slowing turnaround times, and creating more friction within already-stretched property management teams.
According to Morgan, there needed to be certainty about payment speed, clarity about dispute resolution, and mechanisms for tenant accountability before the scheme officially began.
She said there needed to be a surety that claims would be processed within the same timeframe, or faster, than the current bond system, with no added administrative burden.
Additionally, she said there needed to be clarification around dispute resolution, given that the role of the NSW Civil and Administrative Tribunal (NCAT) would remain pivotal, but the new process would have the government as the intermediary.
Morgan also said there must be strong enforcement to ensure tenants repaid the government promptly, or there could be an erosion of discipline.
“Without these safeguards, you risk introducing friction into what is currently a relatively simple and well-understood process.”
Ultimately, Morgan said the policy was designed to address a legitimate issue, but it would prompt a shift away from a direct tenant–landlord financial relationship towards a more centralised, government-managed model.
She said that while it may improve accessibility for tenants, it also introduces complexity and potential unintended consequences.
“The key test will be whether it works just as efficiently in real-world property management – not just in theory.”
“If it slows down bond claims or weakens tenant accountability, landlords will feel the impact very quickly,” she concluded.
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