What the Proposition of ‘Pet Bonds’ Could Mean For You
As property management experts, we are always on the lookout for important updates that will affect tenants and landlords alike. One of those is the proposed introduction of ‘Pet Bonds’ by the coalition government, expected to come into play from early 2025. Here’s what you need to know about the proposed change and how it might affect you!
First up.. What are Pet Bonds?
Pet Bonds are an additional security deposit specifically intended to cover potential damages caused by pets in rental properties. Under the new legislation, landlords may legally be able to ask tenants with pets for an additional 2 weeks of bond monies. Furthermore, tenants would become liable for covering the full costs of accidental or careless pet damages. Currently, they are only required to pay up to 4 weeks rent or the landlord's insurance excess amount (whichever is less).
Benefits for Tenants:
-
More Rental Options: The introduction of Pet Bonds would make it harder for landlords to turn down tenants renting with pets. This is a huge win for pet owners who often struggle to find pet-friendly rental properties.
-
Fairer Access: Under the proposed law, tenants could expect a fairer chance when applying for rentals with pets. Landlords will only be able to refuse pets on reasonable grounds, such as specific the unsuitability of the pet or property, or restrictions regarding local by-laws.
Benefits for Landlords:
-
Additional Security: Landlords can now require a Pet Bond, which provides extra financial security against potential pet-related damages. This bond is typically up to a certain amount, often one or two weeks' rent, in addition to the general bond. Furthermore, they would be able to on-charge the full amounts of pet-related damage that’s beyond fair wear and tear. Currently they only have partial cover for this.
-
Attract Long-Term Tenants: Pet owners often seek stability and are more likely to stay longer in a rental property. This can lead to lower turnover rates and a more consistent rental income.
The Drawbacks for Landlords
Despite the advantages, landlords would no longer be able to refuse pet-owning tenants outright without a valid reason. ‘Reasonable Grounds for Refusal’ may include the premises not being suitable for pets (or vise versa), relevant by-laws or body corporate rules restricting pets in certain areas, or tenants not being willing to agree to ‘reasonable conditions’ set by landlords. For landlords hesitant about leasing to tenants with pets - this is the big one to prepare for.
This change requires a shift in how properties are managed and may involve additional considerations for property suitability assessments and compliance with new regulations.
Our Take on Proposed Changes
Overall, we see the introduction of Pet Bonds as a positive step forward. For tenants, it means greater freedom and options when searching for a home, ensuring that pet owners are not unfairly excluded from the rental market. For landlords, the additional protections provided by Pet Bonds can make renting to tenants with pets less risky, potentially leading to more stable and long-term rental agreements.
However, it's crucial for landlords to familiarize themselves with the new grounds for refusal and start considering relevant by-laws and their properties suitability for renting to tenants with pets.
Note, these are proposed changes currently before Government. They may change, but we are anticipating a finalised bill could come into effect early 2025. We will be keeping a close eye on developments, so make sure to follow our social media and sign up to our mailchimp for updates if you haven’t already!
For more info on this and other updates to the Residential Tenancies Amendment Bill, check out The Ministry of Housing and Urban Developments website.