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Fines on landlords put forward as a measure to reduce bond disputes

By Juliet Helmke
03 July 2024 | 12 minute read
noel lim anika legal reb yoynwg

New research shows that over a third of bond claims don’t hold up under pressure. Should there be penalties on landlords for lodging them?

That’s the case that Victorian legal tech start-up and social enterprise Anika Legal is making. The not-for-profit legal service for renters has analysed data from 147 bond disputes in 202223 and revealed that in 39 per cent of the cases where Anika Legal assisted renters, no money was recovered by the rental provider.

Noel Lim, CEO and co-founder of Anika Legal, commented that the results of the firm’s research show that in a surprisingly high percentage of cases, bond claims are being lodged on “baseless” grounds.

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Moreover, when provided with legal assistance, Anika Legal found that renters were on average able to recover two-thirds of the bond money claimed by rental providers – a total of $1,688.

Recovering the funds is no easy – or quick – feat. The firm reported that wait times for Victorian Civil and Administrative Tribunal (VCAT) hearings within this two-year period averaged 502 days.

Almost half of the not-for-profit’s clients said that as a result of bond disputes, they had trouble meeting the bond requirements of their next rental. Eight in 10 reported that the bond dispute caused them stress and anxiety.

“Unfair bond claims lead to a cycle of disadvantage that can result in homelessness,” Lim said, stressing the stakes of the issue.

“There’s no penalty for a rental provider to make a baseless bond claim, so they’re treating them like free lottery tickets,” he added.

One of Anika Legal’s recommendations for creating a more equal bond system includes implementing and enforcing civil penalties for unfair bond claims to deter rental providers from exploiting renters.

The firm argues that the state also stands to gain from this measure by reducing the number of claims that come before VCAT.

If similarly 39 per cent of the estimated 23,700 bond disputes that reach VCAT each year are unfounded, Anika Legal argues that with penalties in place they would likely not be lodged in the first place, leading to savings of up to $14 million in costs.

The service also supports the implementation of a portable bond scheme to streamline the rental process, and is asking for the state to adjust the eligibility criteria for rent assist payments to ensure equitable access.

“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,” Lim said.

ABOUT THE AUTHOR


Juliet Helmke

Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.

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