A new bond system is promising to revolutionise Australia’s rental industry. Known as Trustbond, the service says it will replace the cash bond with a surety certificate that customers can buy for a fee, giving them a wider cash flow.
Trustbond replaces the traditional cash bond (which can be up to six weeks of rent) by giving tenants a trust score. They then pay a fee for each period of the lease that ends up being less than the entire bond would have been, provided there are no issues with the property.
For example, for a rental bond of $1,500, the fee can be as low as $190 to cover the lease. Trustbond will then cover the landlord for the full $1,500 with a surety bond certificate issued by general insurer AAI Limited.
Pre-approval for a Trustbond can be done online in a matter of minutes, with the automated eligibility process being based on the applicant’s online reputation.
“Through this we make an assessment that if you are a good online citizen, you will also be a trustworthy tenant,” Trustbond said. “Tenants establish a TrustScore and if you have a high TrustScore you will receive a discount.”
So far, the service is only available in Adelaide, though Traity, the parent company behind Trustbond, hopes to expand its product into other Australian markets.
While the service has the potential to help cash-poor renters and those on lower incomes cover their rental bonds, renters’ rights advocates say the Trustbond system, and other cash-free bond solutions, aren’t the best option for consumers.
Leo Patterson Ross, senior policy officer at the Tenants’ Union of NSW, said he’s concerned by the growing trend of non-traditional bonds.
“It’s coming up and there’s been a number of organisations and companies sniffing around this space,” he told the Domain Group. “There’s a real question mark on whether it’s a good deal for renters.”
In New South Wales, a state-run program is already in place to cater to vulnerable renters.
“For people on lower incomes, the state government provides interest-free bond loans, that would probably be a better model to look at,” Patterson Ross said. “The problem is that people who are in a tight bolt financial position are often taken advantage of.”