In New South Wales, rental bonds are pooled to earn the maximum amount of interest. Tenants are paid a small amount of interest provided the bond is returned. The rate at which interest is payable is determined by the Commonwealth Bank on a balance of $1000. See section 173 of the Residential Tenancies Act 2010 (NSW). How did they arrive at this figure? I would think that the average bond amount is significantly more. From the start of this year, the average rent per week is about $500. Creativity rather than mathematics is my forte, but this seems decidedly odd to me. The majority of income earned from the collective pool is allocated to the Consumer, Trader and Tenancy Tribunal and the Tenants Advice and Advocacy Program.
In Victoria, tenants are not paid any interest earned on their bond whether it is returned or not. See section 436 of the Residential Tenancies Act 1997 (Vic). From what I understand, the interest goes towards funding the Victorian Civil and Administrative Tribunal. Apparently it used to fund tenants’ advice and advocacy services but this is no longer the case. The Tenants Union of Victoria is dependent on the Office of Housing, Victoria Legal Aid and Consumer Affairs Victoria.
In Western Australia, tenants are not paid any interest at all. I could not locate much information. But I think interest is earned from a collective pool of bonds from which investments are made. Some of the income is given to the Department of Commerce Bond Administration Section as reimbursement for costs and expenses. The WA Magistrates Court can also clawback some funding relative to the number of minor tenancy matters.
The WA Department of Housing also gets a bite of the cherry and can access funds for any public housing purpose if available. If there are any funds left over, the WA Government can step in and allocate funds to the consolidated revenue account. Check out the schedule to the Residential Tenancies Act 1987 (WA).
I would be interested in figures which indicate how much money the WA Government takes from tenants. Apparently, grants can be applied to WA tenants’ advice and advocacy service. But this is the notice I found when I looked at the website of the Tenants Advice Service - 'Due to unforseen circumstances, Tenants Advice Service is unable to give advice for the foreseeable future and apologise for this inconvenience. If you are in need of urgent assistance, please contact either Department of Commerce or Community Legal Centre'. All telephone and email advice services are not available. What’s going on here?
Turning to South Australia, things get a little better. Interest is accrued from a collective pool of bonds and invested like in Western Australia. The Commissioner for Consumer Affairs and the Residential Tenancies Tribunal are reimbursed for the administrative burden of handling tenancy services and matters. Unlike Western Australia, however, tenants are entitled to some interest from their rental bond. The interest is calculated under a formula released by the Minister for Business Services and Consumer. The interest calculated depends on the amount of bond returned to the tenant. It accrues from the date the tenant paid the bond to the date the tenant is reimbursed. Look at section 63 of the Residential Tenancies Act 1995 (SA). This process seems to be a lot fairer than what we have seen in other states and territories.
It gets somewhat better when we head north to Australia’s famous Uluru. In the Northern Territory, there is no bond authority like other states and territories. A tenant is entitled to interest if the bond money is kept in an interest-bearing trust account. This is so except when the bond amount is held by a real estate agent. For some reason, and I don’t know why, real estate agencies are entitled to the interest. See section 114 of the Residential Tenancies Act 2012 (NT). They’re laughing all the way to the bank. They collect their fee from the landlord and obtain interest from tenants on top of this. Clearly, the downside to this approach is that not as much interest accrues but there is no need to pay for the operation of a statutory body.
Turning to the home of Lack Burley Griffin. The way interest is managed in the Australian Capital Territory is similar to most other jurisdictions. Bond money is kept on trust and interest is kept in a special account. The interest is put towards the operation of the Office of Rental Bonds and the ACT Civil and Administrative Tribunal. The Tenants Union ACT is allocated funding for some of its services. See section 28 of the Residential Tenancies Act 1997 (ACT).
If we look south to the island state, Tasmania is in a period of transition. In 2009, the Rental Bond Authority was introduced along with the Residential Tenancy Commissioner. In 2009/2014 period the new scheme is expected to cost $1.5 million. Apparently, it will be run on a cost-recovery basis until managed bonds start to bear interest.
I will make my conclusions in the next instalment...
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