Should we use the bond for the last few weeks rent?

We welcome questions from landlords on property management issues.  

John asked:

"A statement I often hear is that the landlord deducted the last rental payment from the bond.  Is this ok, or is the bond only to be used in the event of damage, or an order from the Tribunal?"

Yes, it is OK to deduct the last rent from the bond if the tenant agrees to it.  However, “is this best practice?”.  In my opinion, no.

Not because there is anything morally wrong with it, but simply because it puts you as the landlord at a disadvantage.  It isn’t possible to predict how a tenant will leave a property – whether it is dirty, damaged, or chattels missing.  I’ve seen the cleanest tenants just walk out without doing a final clean, with the belief that ‘it shouldn’t need cleaning, I am a very clean person’.  I’ve never seen someone so clean they move all their furniture to clean the fluff, mould, and cobwebs away from the hard to reach places on a regular basis, and this is revealed when these tenants move out.  I’ve seen tenants carefully arrange furniture to hide carpet stains – that’s a surprise to the landlord when they move out.  I’ve heard of ‘moving out’ parties result in properties being trashed on the last day.  Bummer. Or more innocently, moving furniture dings walls and smashes windows. Helpful friends of the tenants pack chattels, resulting in your drapes and/or other items going missing.  In all these cases, having the maximum bond to call upon would be really useful to resolve issues.  If the tenant has already ‘spent’ it with you on the last few weeks rent, you are looking at a much harder road to recover the funds.

I’m told Tenancy Tribunal typically has applications that are more than 6 weeks rent equivalent in value.  This tells me it is a good idea to keep the tenants to their obligations of paying rent up until their last day.  Assuming none of the application is for rent arrears, means if the landlord has 4 weeks bond to play with, that only leaves 2 weeks rent to recover, or write off, as it may be.

If you have any property management questions, pop us an email through our website, www.rentalresults.co.nz or phone us on 04 4711880.