With rents going up along with the other cost of living pressures, tenants moving into new homes have the added burden of coming up with a rental bond before they even get the keys to their new homes.
In most states tenants need to pay a bond equal to a month’s rent, and for many homes this can amount to several thousand dollars which sits idle doing nothing for the entire period they rent the house.
The bond ties up significant amounts of cash, putting it out of reach for a long period at a time when most tenants need every dollar they can get. It is the very definition of dead money
Most landlords will also require two week’s rent up front, so tenants essentially need to have access to six week’s rent before they can even think about applying to rent a property.
Sydney is the most expensive city in Australia for renters and the average rent on a house is $620 per week. So that means that if you want to rent a house in Sydney, you need $3720 ready to go.
A survey by comparison website Finder earlier this year found that 45% of Australian tenants were struggling to make rental payments, and over a third listed rent as the most expensive bill causing them stress.
One company that is offering a solution to this rental burden is startup MyBond, which began in NSW but is rolling out in other states.
With MyBond, the tenant pays only one week’s rent not to the landlord or agency but to MyBond itself.
This one week’s rent is MyBond’s fee for service. If tenants stay longer than a year, then there is a flat monthly fee which is 2.08% of the bond value.
The upside for the tenant is that instead of parting with a month’s rent as a bond, the cost of getting into the house is reduced by the equivalent of three weeks’ rent.
Taking the Sydney average rent of $620 per week, that means that tenants can reduce what they need upfront by $1860.
For tenants, the equation is whether they improve their cash flow now by $1860, and pay $620 to do so, or have $2480 tied up doing nothing for the period of their tenancy.
Dealing with a new third-party provider in the rental market might make you nervous, but check out MyBond’s reviews on the consumer feedback site Trustpilot if you want to do some due diligence.
Of 237 reviews, 91% are five-star so which suggests that many people who are using the service are opting for the cash flow and are happy they did.