Fleur-Revell posted on July 03, 2010 00:34
By Fleur Revell, New Bond System Makes Renting Cheaper, a novel insurance solution is set to help landlords and tenants alike.
An innovative new bond system is set to shake up the New Zealand tenancy market, making renting a home more affordable and accessible.
From July 1 2010, SmartBond will be available to both landlords and tenants as an alternative to the traditional Department of Building and Housing administered (DBH) bond system.
Already an international success story, SmartBond avoids troublesome payment scenarios between landlords and tenants by offering landlords a full five weeks cover for unpaid rent or willful damage, in return for a small weekly premium. Premiums are calculated as a percentage of a tenancy’s weekly rent at 2 per cent.
An additional option of rent protection insurance (premium 0.5 per cent) also gives landlords the security of knowing that their tenant’s rent will be paid (up to a maximum of 12 weeks), should the tenant become redundant, bankrupt or disabled.
The Director of NZ Guarantee Barry Gordon says SmartBond is a more flexible, financially savvy option for landlords and tenants, which provides increased cover for landlords if a tenancy ends badly.
“The entire SmartBond system has been set up to make the process as straightforward as possible,” says Gordon. “We’re confident that, similar to what we’ve seen internationally, SmartBond will become the bond system of choice for New Zealand landlords and tenants.”
Once parties have agreed to use SmartBond, they sign up online or through a SmartBond Approved Agent. Once approval is granted, the tenancy can begin immediately and as long as premiums are paid, cover is guaranteed until the tenancy ends.
Landlords may also choose to reward current tenants and opt to include SmartBond in the existing rent, allowing any remaining Bond to be released back to the tenant.
Based on a similar successful system employed in Switzerland, Belgium and the UK, SmartBond also offers tenants the additional benefit of applying for preapproval as a SmartBond tenant. The tenant is issued with a SmartBond Approval Certificate which they can use to streamline future dealings with potential landlords.
Landlords and property agents may choose to advertise their rentals as SmartBond properties, attracting tenants who are savvy about managing their money, without the deterrent of having to raise four weeks bond upfront.
SmartBond has a six month minimum term and can be terminated by either party at any time after this term.SmartBond has been developed in accordance with the restrictions of the Residential Tenancies Act 1986 – both landlords and tenants receive the protections afforded by the Act under the SmartBond system.
SmartBond is the offering of NZ Guarantee Ltd, underwritten by Southsure Assurance Limited, a SBS Bank Group Company. Southsure Assurance is New Zealand-owned and operated and has a proven track history of providing insurance services to local communities,