Rental providers (landlords) can only ask for extra bond in a long-term rental agreement (an agreement of more than five years), or when renters make changes to a property.
In long-term rental agreements, rental providers can ask for extra bond after five years, but only if there are five or more years left on the agreement.
Rental providers must give 120 days’ written notice.
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Bond top-ups in long-term rental agreements
In long-term rental agreements a bond top-up can be requested when:
- a renter has been living in a property continuously for five years
- there is a long-term fixed agreement in place for another five or more years.
The rental provider must give the renter 120 days’ written notice that they want them to ‘top-up’ the bond using the Notice requesting additional bond. The renter must pay the extra bond amount within 120 days.
The rental provider must not ask for a bond top-up more than once in any five years.
For example, in a 10-year agreement, the rental provider can ask the renter to top-up the bond after five years as there are still five years left on the agreement. In a seven-year agreement, the rental provider cannot ask the renter to top-up the bond after five years, as there will only be two years left on the agreement.
Maximum bond top-up amount in a long-term agreement
To calculate the maximum additional bond amount in a long-term rental agreement:
- calculate one month’s rent at the current amount
- subtract the bond that has already been paid
- what remains is the maximum bond top-up.
For example, if the current monthly rent is $1,000, and the original bond paid was $800, the maximum amount of bond top-up that can be requested is $200.
Bond top-ups when the renter makes modifications
Rental providers can ask for extra bond when renters ask to make changes to a property. This is to cover the cost of reversing the change at the end of the agreement.
However rental providers cannot ask for a bond top-up if the:
- extra bond amount would be less than $500
- extra bond amount is not reasonable when considering the cost of reversing the change at the end of the rental agreement
- parties have agreed that the renter will not need to restore the premises at the end of the rental agreement
- rental provider agreed to a modification that was funded under a government scheme (such as a solar panel rebate or NDIS funding) and the scheme stated that the modification could not be reversed.
Lodging a bond top-up
Rental providers and property managers can lodge a bond top-up through RTBA Online.
Challenging a bond top-up
When a rental provider asks for a bond top-up, the renter can apply to the Victorian Civil and Administrative Tribunal (VCAT) to either:
- change the rental agreement so that the rental provider cannot require extra bond
- change the amount of extra bond that has to be paid.
VCAT will consider whether paying extra bond will result in severe hardship for the renter and make any order it considers appropriate.
If the renter does not top up the bond
Renters must pay the bond top-up by the date specified in the written notice. If they do not, the rental provider may apply to VCAT to order the renter to pay the extra bond.
Renting law reforms
Victoria made significant changes to renting laws in 2021.
Some of the major changes to bond top-ups include:
- bond top-ups are now allowed when a renter has occupied the property continuously
- rental providers can ask for additional bonds when agreeing to modifications
- a renter can now apply to VCAT to vary the amount of extra bond requested by the rental provider.
You can read about these and other changes in a summary of the reforms or in detailed fact sheets and guides.
Sections of the Act
If you want to know what the law says about bond top-ups, you can read these sections of the Residential Tenancies Act 1997:
- Section 34A – Additional amount of bond proportionate with rent increase
- Section 34B – Renter may apply to VCAT to vary additional amount of bond
- Section 64 – Modifications to rented premises.