19 October 2017
Over the past 12 months, Consumer Protection has had a specific focus on reducing the number of late lodgements of residential tenancy bonds, through an ongoing compliance program, primarily focussed on education.
Consumer Protection provided the industry with notice of the imminent compliance strategies to curb the incidence on late bond lodgements in bulletins issue 128 and issue 133.
It is now evident that Consumer Protection’s focus on this area has paid off. Results in this time have shown a noticeable improvement, with the percentage of late bond lodgements lodged by real estate agent having reduced from 7.4% of total bonds lodged by agents in January 2017 down to 3.6% in September 2017 – that’s nearly a 50% reduction.
From January 2017 to the end of August 2017 enforcement actions for late bond lodgement have included the following:
- 951 education letters;
- 173 administrative warnings; and
- 34 infringement notices ($2,000 each).
So how does the enforcement action work?
The complaint history of an agency will be taken into consideration. If it is the first instance of a late bond, then an education letter is issued with the view to informing agents of the breach and providing education on their responsibilities.
If further late bonds are received, then consideration is given to escalate this to the issuing of a formal administrative warning. The person in bona-fide control of the agency may also be warned about their possible breach of the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016. This would be in regard to failure to properly supervise the action of their staff and their agency by taking reasonable steps to ensure compliance with requirements of the Residential Tenancies Act 1987 (the RT Act).
If these actions fail to stop late bond lodgements from that agency, then it may be considered appropriate at that time to apply a modified penalty by issuing infringement notices.
Generally, infringement notices will not be issued for more than one breach, even where multiple bonds have been lodged late at a particular time. However, please note that an infringement notice could be issued for every instance of a late bond lodgement and consequently, an agency who lodges several bonds late may potentially receive a $2,000 infringement notice for each one.
The Commissioner for Consumer Protection (the Commissioner) may determine that prosecution action is necessary where prior attempts to achieve compliance through education, formal warnings and the issue of infringement notices has not had the desired impact on the timely practices of those handling tenancy bonds. The maximum penalty in the Magistrates Court for a single offence is $20,000 and when prosecution action is taken, it is likely that all occasions where a bond lodgement is found to have been lodged late will be considered.
Remember, the bond is the tenant’s money held in trust and the RT Act requires that the bond must be lodged with the Bond Administrator as soon as practicable, or within 14 days of being received.
The Commissioner wishes to acknowledge the improvements that the real estate industry has made in the timely management and handling of tenancy bonds this year, but reminds everyone that there are still opportunities for improvement, and encourages your continued vigilance in monitoring and managing your processes and practices.
Encourage property owners to subscribe to the Landlord bulletin
Consumer Protection requests that you encourage your clients with rental properties to subscribe to our Landlord Bulletin.
The aim of the Landlord bulletin is to educate landlords of the legal requirements and processes which must be followed in managing a rental property. This can benefit the relationship between owner and agency.
Many owners of rental properties are unfamiliar with the law regulating residential tenancies and may have unreal expectations about the management issues which crop up.
By giving landlords more knowledge they will better understand that the actions taken by the agency to manage the property need to be within the scope of the legislation.