Rental community startup, Snug.com today welcomed the release of new ACT regulations enabling rental bond guarantees which enable its world leading innovation, BondCover.
Backed by Australia’s largest general insurer IAG, BondCover swaps an old-fashioned cash rental bond with a certificate of guarantee saving renters the large upfront payment while still protecting owners.
BondCover provides similar protection as a cash bond by guaranteeing that the owner will be paid for a valid bond claim under the lease, thus retaining the tenant and landlord rights and obligations, with the option for Tribunal if required.
Renters can purchase BondCover for around 5 per cent of the face value of the rental bond, so a renter with a $2000 cash bond could obtain BondCover for around $100 per annum, and receive their $1900 cash back.
"Snug first announced the BondCover digital innovation in June 2017 and we’re delighted that the ACT Government moved quickly to introduce legislation and a reasonable regulatory framework," Butterworth says.
BondCover was conceived when Snug research on nearly 2 million bonds uncovered that 99 per cent of renters (by value) do the right thing: around 80 per cent of rental bonds are refunded without claim, around 19% per cent is largely negotiated then resolved between parties and of the 1% that head to the Tribunal, the large majority of renters pay.
In developing BondCover, Snug also conducted extensive legal and actuarial research, and engaged with numerous state governments. Its focus group research on hundreds of renters found that renters are most concerned about their rental reputation and ability to rent their next property, driving their good behaviour and settlement of claims.
"Snug’s BondCover product has been designed to comply with existing rental tenancy legislation and relevant financial services and insurance regulations. BondCover is a win-win-win for renters, owners and agents. BondCover helps address housing affordability, returns precious cash back to the economy and it makes renting easier," continued Butterworth.
"The current cash rental bond system is outdated, inefficient and unfair. With 1 in 3 Australian’s now renting, it’s time for all Australian State and Territory Governments to handback $4 billion dollars in cash rental bonds and enable a better bond system," said Butterworth.
"The world has changed since the cash bond system was established decades ago. We have the technology to better manage identity, reputation and recourse, the days of the cash bond are over," concluded Butterworth.
Snug is in the process of applying for licensing under the new ACT regulatory system.
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