The NSW government’s new scheme to let renters transfer their bond between properties will cost tenants $25 for the privilege, expose landlords to a new bureaucratic layer when claiming damages, and potentially flood NCAT with disputes. Property Buzz’s Phil Tarrant breaks down where the policy goes wrong.

In theory, rental bond portability makes sense. Moving house is expensive, and the timing gap between recovering your bond from one property and lodging it at the next can leave renters double up on costs — or worse, unable to secure a new tenancy at all while they wait for funds to clear. The New South Wales government’s proposed solution — allowing tenants to transfer their bond directly from one rental to the next — addresses a real pain point in the rental system.

The problem is the execution. And on this week’s Property Buzz, co-host Phil Tarrant walked through precisely why the mechanics of this scheme create as many problems as they solve — for both parties.

How the scheme is supposed to work

Under the proposed model, a tenant moving from one rental property to another would be able to port their existing bond to the new tenancy rather than withdrawing funds and redepositing them. The transfer would be administered by the NSW government — not a third party — at a cost of $25, payable by the tenant. The bond would effectively move from being held against the old property to being held against the new one.

The appeal for tenants is clear: no period of time where $3,000 or $4,000 is locked up in the system while you’re trying to secure a new lease. For anyone who has experienced the stress of trying to win a rental property in a competitive market while simultaneously waiting for a bond refund, this removes a meaningful friction point.

The landlord problem

The scenario that concerns property investors begins the moment a tenant uses bond portability and then leaves their former property in poor condition. Under the current system, a landlord can initiate a bond claim directly against the funds held in trust. Under the new system, those funds are no longer attached to the property — they’ve moved with the tenant to their next address.

That means a landlord seeking to recover the full bond must now go back to the NSW government to make a claim. If both parties agree the full amount is owed, the government then needs to pursue the tenant for the shortfall — since the bond is already encumbered by the new tenancy.

The $4,000 bond is already sitting against the new property. That means the NSW government needs to chase that person for $4,000. Good luck getting that. — Phil Tarrant, Property Buzz

Tarrant illustrated the problem with a concrete scenario. Say a tenant moves out having caused $4,000 worth of damage. The bond has already been ported to their new address. The former landlord makes a claim through the NSW government. Both sides agree $4,000 is owed. But the money isn’t there — it’s funding the new tenancy. The government now needs to recover that money from the tenant. The tenant says they can’t afford it. So either the landlord waits, or the matter ends up in front of the NSW Civil and Administrative Tribunal.

An NCAT bottleneck in the making

It’s that tribunal pathway that Liam Garmin flagged as the most likely systemic consequence of the new scheme. NCAT already handles a significant volume of bond disputes between landlords and tenants. If bond portability creates a new category of contested claims — where the funds are no longer directly accessible, creating disputes about who owes what to whom — the number of hearings could increase substantially.

“Your NCAT hearings are going to go through the roof,” said Garmin. “There’ll be a bottleneck there as well, which is bad for both parties.”

And the tenants don’t come out ahead either

There’s a further irony for renters who were supposed to be the primary beneficiaries of the reform. The $25 fee is modest, but it’s being paid by tenants — the very group the scheme is designed to help. More significantly, honest renters who use the system responsibly now effectively lose the clean-break discipline the current system provides. Under the existing model, a tenant who damages a property faces losing their bond before they can move on. That financial consequence is a meaningful incentive for responsible tenancy. Portability removes that immediate accountability.

“At least [under the current system] they know it’s finite,” said Tarrant. “If they misbehave in a rented joint, they’re not going to have the bond to move to the next place. So they have to save it up. That’s just ensuring the integrity of the rental system.”

The verdict

Tarrant’s position is not that bond portability is a bad idea — it’s that this particular implementation hasn’t been thought through to its logical conclusion. The policy identifies a real problem for tenants, but routes the solution through a government-administered system that creates new friction for landlords and shifts the risk of non-payment onto a bureaucratic collection process that is unlikely to be efficient or effective.

“Think about the execution, guys,” said Tarrant. “If you don’t think about this stuff, come and chat to me — I’ll tell you what’s going to happen before it takes place.”