NZ tenancy bond rules: everything landlords need to know

Bonds are simpler than you think

The tenancy bond is one of the most fundamental parts of a residential tenancy in New Zealand, yet it's also one of the areas where landlords most commonly trip up. The rules are straightforward once you understand them — they're set out in Part 2, Subpart 2 of the Residential Tenancies Act 1986 (RTA) and administered by Tenancy Services.

How much bond can you charge?

Under section 18 of the RTA, the maximum bond a landlord can require is four weeks' rent. This is calculated based on the rent payable at the start of the tenancy.

If the weekly rent is $600, the maximum bond is $2,400. You can charge less than four weeks' rent if you choose, but you cannot charge more — regardless of the property's value, the tenant's circumstances, or any other factor.

One nuance: if the rent increases during the tenancy, you cannot "top up" the bond to reflect the new amount. The bond is locked in at the start unless both parties agree to adjust it.

Collecting the bond

You can collect the bond as a lump sum or allow instalments, but the full amount must be lodged within the required timeframe. The bond must be paid in addition to rent — tenants cannot unilaterally stop paying rent and "use" the bond at the end of the tenancy.

Lodging the bond with Tenancy Services

This is where many landlords trip up. Under section 19 of the RTA, you must lodge the bond with Tenancy Services within 23 working days of receiving it. Not 23 calendar days — 23 working days.

Lodgement can be done online through the Tenancy Services website. Once lodged, Tenancy Services holds the bond in trust for the duration of the tenancy — the money does not sit in your bank account.

What happens if you don't lodge on time? Failing to lodge is an unlawful act under the RTA. The Tenancy Tribunal can impose penalties. It's an avoidable problem — lodge promptly and keep a record of the confirmation.

What the bond covers

The bond exists to protect the landlord against specific losses at the end of the tenancy. It can be used to cover:

• Unpaid rent. If the tenant leaves owing rent, the bond can be applied to the outstanding amount.
• Damage beyond fair wear and tear. If the tenant has caused damage to the property that goes beyond normal wear and tear, the cost of repair can be claimed from the bond.
• Other costs. In some cases, the bond may cover other amounts owed by the tenant, such as the cost of cleaning if the property was left in an unreasonable state.

The bond cannot be used for normal wear and tear (carpets wearing thin, paint fading, minor scuffs), pre-existing damage, or upgrades and improvements to the property.

The importance of property condition reports

At the start of every tenancy, complete a thorough property condition report with dated photographs. At the end, conduct a final inspection and compare. Without this, bond disputes become your word against the tenant's — and the Tenancy Tribunal strongly favours documented evidence.

Keeping condition reports organised and linked to the right tenancy is easy to let slide. If you're managing your property with keel, you can store inspection reports and photos alongside the tenancy record so everything is in one place when you need it.

Refunding the bond

When the tenancy ends, the bond must be refunded or claimed through the proper process. Here's how it works:

If both parties agree

If you and the tenant agree on how the bond should be split — whether that's a full refund, a partial refund, or full retention — you both complete a bond refund form through Tenancy Services. Both parties sign, and Tenancy Services releases the funds accordingly.

This is the simplest and most common outcome. Most bond refunds are processed by agreement within a few weeks of the tenancy ending.

If there's a dispute

If you and the tenant cannot agree on the bond — perhaps you want to claim for damage and the tenant disagrees — either party can apply to the Tenancy Tribunal for a ruling.

The Tribunal will consider the evidence from both sides: the tenancy agreement, the property condition reports, photographs, quotes for repair work, and any relevant correspondence. It will then make an order directing Tenancy Services on how to distribute the bond.

Tribunal applications cost $20.44 when filed online. Hearings are relatively informal but the adjudicator's decision is legally binding.

Timeframe for refund

There is no fixed statutory deadline, but in practice, if both parties complete the refund form promptly, the bond is typically released within 5 to 10 working days.

Common mistakes landlords make

Claiming for fair wear and tear

This is the most common bond dispute. Landlords who try to claim for carpet cleaning, minor wall marks, or general ageing of the property will usually lose at the Tribunal. Fair wear and tear is expected, and the law accounts for it.

A useful test: would the damage have occurred regardless of who was living in the property? If so, it's likely fair wear and tear.

Not lodging the bond at all

Some landlords — particularly those renting informally to friends or family — skip bond lodgement entirely. This creates significant risk. If the tenancy sours, you have no bond to fall back on, and you may face penalties for failing to lodge.

Holding the bond in a personal account

The bond must be lodged with Tenancy Services. Holding it in your own bank account, a trust account, or anywhere else is unlawful under the RTA. It doesn't matter if you intend to lodge it later — the money must go to Tenancy Services within the required timeframe.

Making deductions without agreement

You cannot unilaterally deduct amounts from the bond. Even if the damage is obvious and the cost is reasonable, the refund must be processed through Tenancy Services with the tenant's agreement or a Tribunal order.

Final thoughts

The bond system in New Zealand is designed to be fair to both parties. As a landlord, your rights are clear: you can hold up to four weeks' rent as security, and you can claim against it for genuine losses at the end of the tenancy. But the process must be followed — lodge on time, document the property's condition, and resolve refunds through the proper channels.

Getting the basics right protects you and avoids unnecessary disputes. It's one of those areas where a small amount of diligence at the start of a tenancy pays off handsomely at the end.