$1m-plus in unclaimed bonds

19:47, Oct 28 2013

In Wellington alone, there is $1.18 million of unclaimed tenants' bonds.

Under the provisions of the Tenants Protection Act 1986, tenants pass a bond to the Ministry for Business, Innovation and Employment for safe- keeping until the tenancy is over.

If there is no damage to the house, the bond money is returned to the tenants - unless of course, as has been pointed out ($1 million of bonds lies uncollected as tenants 'forget' Oct 22), the tenants do not claim their money.

Then the money goes into the Government's consolidated fund. The tenants who do not collect their bond, for whatever reason, are essentially paying additional tax.

The interest, along with the interest from the bonds the Government holds for the 32 per cent of the population who are tenants, helps provide for tenancy mediation and dispute resolution services, such as the Tenancy Tribunal, which hears about 20,000 cases a year.

The tenants' money funds the tribunal, but the tribunal receives only 10 per cent of its applications for a hearing from tenants - 90 per cent are from landlords.


The Tenancy Tribunal is the only court expected to be funded by some of the users rather than Vote Justice.

Of course it is important for the Government to do whatever it can to return uncollected bonds to rightful owners.

However, if these efforts are unsuccessful within a certain time period, then Helen Gatonyi, manager of Christchurch's Tenants Protection Association, has suggested that it should go towards the funding of tenant advocacy and support.

Indeed, such funding was promised to tenant organisations leading up to the establishment of the bond scheme in the 1986 Residential Tenancies Act. The interest from all tenants' bonds - not just unclaimed bonds - was to be used to fund advocacy services for tenants. Tenants' money was explicitly intended to be used to support tenants.

Despite the promises to tenant organisations, in private and in Parliament, the money never materialised. Tenant advocacy is of crucial importance in New Zealand, where we have a low proportion of social housing and serious quality problems in private rental homes.

Declining rates of home ownership since 1990, means that more households are now renting homes.

Rental homes are more likely to be cold and damp, which has serious respiratory and other consequences for vulnerable younger and older people.

This is particularly concerning when we consider the Children's Commissions Expert Working Group's Report on Child Poverty has shown that half of all children in poverty live in rental housing, and mostly in the private sector.

Because of the lack of a warrant of fitness for private rental housing, it is up to renters to encourage improvements in the quality of rental homes through their own petitions to landlords or through the tribunal.

However, research from New Zealand and overseas indicates that this is problematic. There are significant costs, risks and disincentives for tenants to make this move, as reflected in the very low number of cases brought by tenants.

Tenants are more likely than landlords to be young, on low incomes, and to have less experience of tenancy law.

Tenancy advocates, in the few places they exist in New Zealand, provide tenants with information on their rights and responsibilities under the law and support tenants to assert their rights. Yet, like many community organisations, they struggle for funding.

For tenants, Australia is a luckier country. The interest from bonds stays where it belongs - with tenants. It is used to fund organisations that advocate for the rights of tenants - in much the same way that landlords' associations advocate for their interests here in New Zealand. The organisations also provide support to individual tenants.

That can make all the difference when it comes to preventing homelessness and ensuring that children and their families have access to warm, safe and stable homes.

Elinor Chisholm, Sarah Bierre and Philippa Howden-Chapman are part of the University of Otago, Wellington's He Kainga Oranga Housing and Health Research Programme.

The Dominion Post