Landlords may owe $6M in bonds to Government

Press, 23 September 1987, Page 8

Landlords may owe $6M in bonds to Government

By GLEN PERKINSON As much as $6 million in outstanding bond payments from Canterbury landlords may be owed to the Government Those landlords renting private properties illegally may face prosecution by the Housing Corporation’s Tenancy Bond Division. The division revealed yesterday that only a third of the bond payments for the region’s private rental properties had been received. The division’s manager, Mr Philip Pigou, said 6500 bond deposits had been received by the division from the 20,000 private tenancies in Canterbury. There are about 27,000 tenancies in Timaru, Ashburton and Christchurch — 7000 of these are State houses. Mr Pigou said that if the outstanding bonds had been charged at the maximum allowed under the act there would be $5.94 million owing to the Christchurch division.

The maximum bond a landlord can take is four weeks rent The average Canterbury-region rent is about $llO. The Residential Tenancies Act requires all landlords charging more than $5O in bond to turn that money over to the division.

The division invests the bond money and uses the interest to fund the Tenancy Tribunal, mediation between tenants and landlords and advisory services.

> The bonds withheld in Canterbury could amount to a loss of about $1 million in interest revenue.

Mr Pigou said the disparity between bonds received and outstanding was a concern.

“If landlords persist in not paying the money to us we will bring an action against them,” he said. However, the division may not have enough manpower or resources to catch the defaulting land-

lords. Mr Pigou said most of the division’s staff were occupied constantly with processing bonds that were arriving, advising landlords and tenants, and mediating disputes between tenancy parties. Tracing defaulters cost time and money, he said. Mr Pigou pointed out that there were three reasons- which could explain away as much as 40 per cent of the unpaid bonds or as little as 10 per cent — either, the landlords charged less than a bond, charged no bond, or had returned the bond taken to the tenant after the act came in.

However, the division knew of some cases where landlords had returned bonds to tenants and “had their fingers burned.” The landlord had been left with several weeks rent owing or a damaged property and no financial security. Mr Pigou said pinpoint-

ing where either no bond was charged or had been returned was difficult

A spokesman for the Property Investors’. Association, Mr Alan Roberts, said that he considered the number of outstanding bonds could be understood. He said that the number of landlords not charging tenants a security was increasing.

“I think the estimate of those not taking bonds could be a little on the low side. '

"It is the fact of the hassle ol having to pay the bond in to the division and then get it out again at the end of the tenancy. He said an association insurance scheme was available for landlords to protect themselves against financial loss in the absence of a bond — but that was expensive. He did not encourage landlords not to take a bond, but he did not encourage them to take one.