34,000 bonds unclaimed

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Nearly $6 million of unclaimed bond money is sitting in a bank account with the Department of Building (DBH) and could be returned to tenants if a bill goes through Parliament.

Tuesday, September 9th 2008, 12:00AM 4 Comments

by The Landlord

At the start of a tenancy landlords can ask for a bond up to the equivalent of four weeks' rent. That money is returned when the tenancy ends and there are no disputes or damages which need to be settled.

However, over the past 19 years 34,166 bonds with a value of $5.78 million remain unclaimed.

DBH, which administers the scheme, says there are a range of reasons why the bonds may not have been returned.

It says the unclaimed money sits in the bank earning interest.

At the moment the department has no way of proactively attempting to contact the owners of the unclaimed bonds.  

However, the Residential Tenancies Amendment Bill, introduced to Parliament in May, will give it the ability to advertise the names of people entitled to unclaimed bond money. If advertising is unsuccessful, the bill will allow the department to request address information of tenants owed unclaimed bond money from the Ministry of Social Development.

The money, strictly speaking, belongs to tenants and is being held in trust by the department. It only becomes the landlords’ money if they make a claim for it which is agreed to by the tenant or upheld by the Tenancy Tribunal.

It is not compulsory for landlords to ask for bonds, but if they do the money must be held by the Bond Centre. The large majority of landlords ask for bond, but Landlords.co.nz understands that quite a few landlords with multiple properties don’t ask for bonds.

Under the law they can request bond equivalent to four weeks' rent. Previously the average bond was around two weeks, but that has increased to be close to the equivalent of three weeks rent.

It says the average bond today is $597 and average unclaimed bond is only $169. This suggests a lot of the unclaimed ones are very old.

DBH says it currently has 420,989 active bonds to the value of $251.73 million. This money is held in the Crown’s consolidated account earning interest. DBH then uses money from the investment to run its services including the Tenancy Tribunal, which addresses complaints between landlords and tenants and for its education programme.

DBH recommends that landlords ask for the maximum amount of bond.

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