14 Mar Making rental bonds easier – Michael Wood
We have some news about a new product called BONDSURE that will ease the rental bond burden for tenants and offers great protection for tenants, investors and agents. It is proving to be very popular.
Kevin: Queensland entrepreneur and lawyer Michael Wood launched an innovative new property-focused business late last year. We told you about it on the show. It aims to take some of the hassle out of renting.
The company is called BondSure. It’s been progressing really well in the very short period of time since it’s been launched. Over 100 real estate officers around Australia have signed up, and according to Michael Wood, they’re adding quite a few each and every week. Michael joins us.
Good morning, Michael.
Michael: Yes. Good morning, Kevin.
Kevin: What a great business this is. Firstly, tell us how it works. How does BondSure work?
Michael: Basically, rather than paying their bond up front, it offers renters the choice to pay that off in installments over 6 to 12 months, and then the money is deposited by us with the Residential Tenancy Authority. It’s all the same for the landlord there.
But also what we’ve done is go a bit further. Not only the choice of installments rather than upfront cash, but we’ve introduced a new – rather revolutionary, I think – insurance product that protects that bond whilst it’s sitting there with the government.
Of course, the landlord still has priority if there’s any rent default, but what we’re trying to do here is introduce a product that protects the bond against increased cost of cleaning and accidental damage, two issues that often erode the bond for the tenant at the end of the lease.
Kevin: Yes, we’ll talk in a moment about how many people don’t get their bond back or get absolutely get nothing at all back or even part of it. But just before we do that, why did you do this? Did you perceive there was a need for this to happen?
Michael: Yes. My main business is insurance, and my Lloyds broker in London introduced the concept of actually having a landlord waive the right to a bond and just have an insurance policy. It’s being done in a very small way over in America.
The situation over in America with strata title is very different, so they approached me and said, “Look, Michael, could this work in Australia?” I looked into it, and I decided that given that we can have a couple of hundred different owners in one building – rather than like in America where often one person owns the whole building, all the units – what I thought was that rather than do away with the bond, let’s help the tenants and protect the landlord by still having that bond but then protecting it with an insurance policy.
Kevin: That’s interesting, Michael. Could it work in a single house situation where the owner would be happy with an insurance policy over a bond?
Michael: Most definitely. We offer it both for units and houses. The only difference there is another extra product that we have is a contents policy. There is a slight differential between units and houses, but otherwise, the pricing is all pretty much the same.
Kevin: I said in the intro that about a hundred offices around Australia have picked it up. What sort of reaction are you getting from them? Because I would have thought that this would be fairly popular with agents.
Michael: Yes. We’ve been really, really pleased by the support they’ve shown. The first thing is is the landlord still protected? Which of course, the landlord is. The money is sitting there with the RTA, and as I said, the landlord always has priority if there’s a rent default.
But the big thing is there are often disputes, and I’m sure landlords agree that it’s a bit of a hassle at the end of a lease to be arguing with a tenant over what is damage and what isn’t. That’s one of the main reasons that not only did we introduce a product that is to protect against damage – such as damaged carpet, damaged curtains, damaged fittings – but also the increased cost of cleaning, because we didn’t want arguments about what is damage and what is cleaning.
Yes, we’ve been very pleased, and also it helps them with their rollover of leases. We can be notified, and as an insurer, we pay it. It’s above a small excess, just to ensure that they do still do maintain the premises as they should.
Kevin: I’m keen to talk to you about how many people don’t actually get their bond back. I read with interest a New South Wales story, of course, that based on the Rental Bond Annual Report there, they suggested that 35% of tenants received some of their bond back, while one in ten received absolutely nothing.
Michael: It’s anywhere between 35 and 50%, but generally in the 40%s.
Kevin: It’s a great product. If you want to know a little bit more about it, BondSure is the name. Is the website just BondSure.com.au?
Michael: That’s right. It only takes a few minutes, and you don’t have to hand over your bank statement because we do a full credit check, which again helps the landlord. But it’s only taking a couple of minutes.
Kevin: Good on you, Michael. Lovely talking to you, and thank you very much for your time. Congratulations on what you’re doing, as well.
Michael: Thank you very much, Kevin.
Kevin: Michael Wood there from BondSure. That website again is BondSure.com.au.