Powered by fintech Hutly, Bondable is a unique alternative to the traditional rental bond process.
Instead of paying a bond equivalent to a few weeks' rent to their landlord, tenants pay Bondable a monthly fee of $19.99 to Bondable, which guarantees the bond amount.
If there are damages at the end of the lease, Bondable pays the repair expenses then works with both tenant and landlord to find a resolution, which might involve both parties contributing to the cost.
Founder Jeremy Hastings (pictured below) says the product was designed to ease the burden on tenants by freeing up the cash flow that would have gone into a rental bond.
"With rising cost of living and soaring rental prices, locking away thousands of dollars can put a strain on household budgets," he said.
"[Bondable] is very much about building a company and products around the tenants, and bringing a bit more transparency and equity into relationships."
During beta testing, 80% of tenants in Victoria opted in to the service, while 100% of those who participated in the trial have continued to use the product.
The full service launches today after 18 months of testing, during which Mr Hastings says the response from the other side of the aisle has also been very positive.
"When we interview property managers, they're just in disbelief when we pay the claim immediately," he told Savings.com.au.
"We're independently insured, so there's no risk to the consumer or agent that the bond isn't real."
Bondable has received the backing of the Real Estate Institute of Victoria (REIV), with president Jacob Cain calling it "positive innovation in the industry".
"Bondable can play an important role in solving the affordability crisis in Victoria and bringing portability to tenant bonds," he said.
Bondable is set to launch in New South Wales on 9 April, before gradually rolling out over the rest of Australia.
For the moment, Queensland will be an exception, since the current legislation requires a landlord to pay a bond in cash if the bond is guaranteed.
Queensland has also moved to legislate a portable bond scheme.
Mr Hastings said there is a "question mark" around Queensland, but that Hutly will be working with the Queensland Government to get it signed off.
Hutly and Bondable founder Jeremy Hastings
How it works
If there is a dispute over damage at the end of the lease, Bondable initially pays whatever the repair costs.
Its digital mediation process then works with both tenant and landlord to find a resolution.
This is firstly done through digital mediation where both parties communicate through the platform, then if no solution is reached the discussion is mediated by someone from Hutly.
If no solution is accepted by both parties, the case is referred to the relevant state's real estate tribunal.
Mr Hastings says these mediations have been overwhelmingly successful during beta testing.
"With all the interviewing over the last 20 months, we haven't had anything move into dispute, everything's been resolved directly," he told savings.com.au.
"It's really hard for either party to argue the cost of repairs if there's this level of transparency."
Is it worth it?
A standard rental bond is around four weeks' rent, which at the median national rental price of $601 (per CoreLogic) means a bond of $2404.
However, provided there are no issues with the property, tenants get this full amount back once the lease is up.
On a one year lease, 12 monthly payments to Bondable would total $239.88, but you don't get this back.
Tenants are effectively paying to not have to lock away the bond amount through the lease, freeing it up to be spent elsewhere.
One way to look at it is choosing between the cost of a Bondable subscription and the opportunity cost of having a couple of thousand dollars less in your pocket for one year.
For example, Judo Bank currently offers a 5.10% p.a. rate on one year term deposits, so investing that $2,404 there instead would mean a gross return of $122.6, which is less than the cost of a Bondable subscription, although other riskier investments could yield higher returns.
Alternatively, that extra $2,401 throughout the year could mean you are able to afford for something like a holiday, which you might feel is worth the subscription for.
It's also paying for an 'insurance policy' of sorts to mediate between tenants and property managers/landlords if issues arise.
Mr Hastings says customers are also paying for a "fair, transparent process" as well as convenience.
"Historically, property managers might say to a tenant, 'pay up, it's going to cost $500' and it becomes a relationship of distrust," he said.
"What we're trying to do is restore trust in that relationship."
He said the Bondable service could also be particularly useful when a tenant is transitioning between properties, when there might otherwise be two separate bonds held at the same time.
"It's the one subscription...portable between properties," he explained.
Picture by Maria Ziegler on Unsplash
Harry O'Sullivan
Emma Duffy
