RENTAL GUARANTOR LEGISLATION SPARKS CONCERN IN THE ACT
After months of negotiation, the ACT Government has this week enacted legislation that allows licensed commercial bond guarantors to operate within the Territory.
The move enables renters to pay a fee to a commercial guarantor rather than forking out the cash required for a bond. While the initiative has been welcomed by commercial guarantors such as Snug, it’s being eyed with caution by the real estate industry and rental bodies alike.
Snug explains their service sees renters purchase BondCover for around five per cent of the face value of the rental bond. A renter with a $2,000 cash bond could obtain BondCover for around $100 per annum and put the balance of $1,900 towards other uses.
Should a claim be considered valid, the tenant can either pay up or Snug will honour the claim and then recoup their costs.
But the REIACT, agents and even renter representatives are taking a more circumspect view.
Lindsey Burne is the Director of LJ Hooker Dickson and LJ Hooker Woden, and noted his agency would not be an early adopter of the service.
“We want to watch with some caution to see how this plays out in the next 12 months.”