What is a Rental Guarantee Bond?

A Rental Guarantee Bond is a guarantee to pay rental and covered related outgoings under a Lease to the Landlord in the event that the tenant defaults on its lease payments. Outgoings requiring cover are specified in the application form.

For how long does the Rental Guarantee Bond pay the rental?

From the time that a claim is accepted, and for as long as it takes to find a replacement tenant, depending on the length of cover requested. This is referred to as the Indemnity Period. Bonds can be provided for payment periods of up to 24 months.

What happens if the Landlord finds a replacement tenant at a reduced rental?

In the event of a rental shortfall, then the Rental Guarantee Bond will pay the monthly shortfall for the remaining period of the indemnity period, subject to the underwriters approving the replacement lease.

Are additional expenses such as rates and insurance covered?

Yes, providing they are payable under the Lease, and declared in the application. Generally, whatever outgoings are payable by the Lessee under the lease can be covered under the Rental Guarantee Bond.

Does the term of the lease matter?

Cover can be taken out for leases of up to 10 years.

How much does it cost?

It depends upon the indemnity period, and the term of the lease. This cost is a once only payment to cover the entire number of years of the lease, and is paid for when the Bond is issued.

Who pays for the Bond?

The Bond is paid for by whichever party that wants it, - either by the Landlord, or by the tenant. Sometimes the Landlord allows for the one-off cost in assessing the rental, and is able to spread the cost over the term of the lease.