Rent and Security Deposit

Rent

Under the Residential Tenancy Act rent is payable in advance for a payment period, such as a fortnight or a month, and the payment period can be varied only by mutual agreement. A property owner cannot enforce a payment period of more than two weeks rent in advance for boarding premises or 4 weeks rent in advance for all other cases (s19).

Tenants often get confused about the concept of ‘rent in advance’. Rent in advance does not usually mean that at the end of the tenancy period a tenant has accumulated some ‘rental credit’. Rent in advance simply means that a tenant pays for the period that is about to occur. For example, on Monday a tenant pays two weeks rent in advance. This mean the tenant pays for the two weeks following that particular Monday. After seven days has gone by, the tenant is only a week in advance. After another seven days the tenant is no longer in advance and the next payment of rent is due.

Rent receipts are compulsory where rent is paid by cash or cheque, and must contain the tenant’s name, the date on which it was received, the address of the premises, the amount paid and the rental period to which the payment relates (s21). A property owner must keep these records for five years.

A rent increase is allowable during a fixed term tenancy. In both fixed and non-fixed term tenancies a property owner must give the tenant 60 days written notice of intention to increase the rent stating the amount of the increase and the date it is to take effect. Rent cannot be increased before the lapse of twelve months of the contract and any further increases must be 12 months apart (s20). The increase can only be 10% of the contracted rental price. If a tenant considers a rent increase unreasonable, they should consider writing a letter to that effect to the owner or real estate agent. However, there are no other avenues to address this. If the property owner or agent sticks to the requirements under s20, then the increases are lawful.

If a tenant gets behind in rent, a property owner can serve on the tenant a 14 day notice to vacate the premises (s42(1)(a)). If during that notice period the tenant pays the arrears in full, the notice is automatically cancelled (s42(2)). This process can occur twice in a 12 month period. However, if on a third or more occasion a tenant gets into rent arrears, an owner has the right to enforce a notice to vacate regardless of whether or not the tenant makes up the arrears (s42(2)). Under the Act a person cannot make distress for unpaid rent or seize a tenant’s goods for rent arrears. A property owner may sue a tenant for rent arrears in the Magistrates Court, Civil Division.

Security deposit (bond)

Tenants are usually asked for a security deposit also known as a bond. A bond is a sum of money paid by the tenant before moving into the house or flat. The Act provides for lodging the bond with the Rental Deposit Authority (RDA). The payment can be made by post, or at Service Tasmania offices.

This money is held by the RDA as a security against the tenant being in rent arrears at the end of the tenancy, or for damage done to the premises by the tenant. The Act stipulates that a security deposit cannot be more than the equivalent of four weeks rent. The Act also provides that a security deposit cannot be increased during the course of the tenancy.

When lodging your bond, you will be issued with a receipt and number indicating your bond amount and number. Keep this number! You WILL need it.

Tenants are entitled to the return of their bond money if:

• they have looked after the house or flat; and
• are up to date with rent payments; and
• have given proper notice of their intention to leave; and have left the premises in the same or better condition than when they commenced the tenancy.

The property owner cannot legally withhold bond money for deterioration that is the result of ‘fair wear and tear’. Fair wear and tear could include:

• scuff marks on vinyl floors
• wear on carpets
• peeling paint
• marks on kitchen surfaces
• some discolouration of grout in bathrooms

Tenants should give the property owner or agent notice in writing in accordance with the Act when they intend to vacate. Tenants should also arrange for the property owner or agent to inspect the premises in their presence and return the keys on the day they intend to leave. Both parties should refer to the Condition Report at the time of inspection. If the property owner or agent refuses to attend as requested, the tenant can still complete a report in the presence of another witness such as a friend or family member. If possible photographs should be taken and prints initialled and dated.