Interest earned on rental bonds was initially meant to be used to pay for programs that help renters, such as tenancy support organisations and tribunals
Any connection between these millions of dollars and such support programs is currently unclear
In NSW, the Rental Bonds Board currently holds around $2.29 billion in rental bonds – at a conservative 5% rate, the interest on this would easily top $100 million a year
When you pay a rental bond it’s a substantial outlay that generally comes out to four weeks’ rent, so it’s natural to worry about whether you’ll eventually get your money back. Landlords have been known to lay claim to some or all of it at the end of a rental tenancy, sometimes on flimsy grounds.
Most bonds are returned in full, but only technically speaking. For instance, if you receive the same $3200 back that you put in up front, you’re actually getting back less due to inflation. Bond reimbursements aren’t tied to the consumer price index, nor do they include the interest your money would have earned over time.
Instead, the collective interest earned by bonds is mostly held and disbursed by state and territory governments. (The NT is the exception, where landlords and rental agents hold on to bond money.)
Rental bond interest around the country adds up to many millions of dollars. In many jurisdictions, the funds were initially meant to be used to pay for programs that help renters, such as tenancy support organisations and tribunals. But any connection between this money and such programs is currently unclear.
In NSW alone, the Rental Bonds Board currently holds around $2.29 billion in rental bonds
There was a 53% increase in the number of rental bonds held by the NSW Rental Bonds Board from 2008 to 2025, a sign that more people have been forced to rent due to rising property prices. (The latest data from the Australian Bureau of Statistics shows that the number of people renting nationally increased by 43% between 2006 and 2021.)
In an increasingly tough rental market, tenancy services are more essential than ever and there is a lot of money at play.
In NSW alone, the Rental Bonds Board currently holds around $2.29 billion in rental bonds. At a conservative 5% interest, the return on this sum would easily top $100 million a year. In the current system, this is funnelled into the accounts of the NSW Treasury.
At the end of the 2024–25 financial year, the Queensland Residential Tenants Authority held 631,804 bonds at a combined value of around $1.3 billion. The interest from this money also flows behind closed doors into general government revenue.
In NSW, renters are theoretically entitled to a portion of the interest their bonds earn. But the rate of return is based on the Commonwealth Bank Everyday Access Account for balances of $1000 or less, where interest rates have invariably been at 0% or very close to it. NSW rental bonds are currently reimbursed without interest.
So what happens to the interest they earn? According to a preliminary NSW 2026–27 budget submission from Tenants Union NSW to the state government, the NSW Treasury has been tightfisted over the past five years when it comes to returning funds to support renter-focused programs, including to the NSW Rental Bonds Board itself.
The Board had previously managed rental bond investments and collected the earnings on its own, but this changed during the global financial crisis in the late 2000s. The theory was that the investment experts at NSW Treasury would be able to engineer higher returns.
But the NSW Treasury has since only been returning enough money to support existing programs, while the rental market has become much larger, housing shortages have significantly worsened, and renters have needed more assistance than ever.
The first step to ensuring fair usage of the returns on investment is actually obtaining a return at all
Tenants Union NSW CEO Leo Patterson Ross
According to the Tenants Union NSW submission, the Rental Bonds Board has operated at a significant loss for the previous three financial years, spending about $10 million more than it receives every year.
In part, the shortfall can be attributed to a diminishing return on investment for NSW rental bonds, which has dropped steadily from around 6% in 2011 to less than 4% in 2025. The NSW Treasury is apparently not doing a great job managing rental bond investments.
As Tenants Union NSW CEO Leo Patterson Ross, puts it, “the first step to ensuring fair usage of the returns on investment is actually obtaining a return at all.”
The submission argues that a higher rate of return would allow for better funding of projects and organisations like the NSW Tenants’ Advice and Advocacy Program, which is working to prevent homelessness, among other things.
In Queensland, the Residential Tenancies Authority (RTA) collects and manages rental bonds.
Tenants Queensland CEO Penny Carr says that there was a “clear and direct link” between the interest earned on rental bond investments and the funding of the Tenant Advice and Advocacy Service Queensland (TAASQ) program, until it was defunded in 2012.
Around the same time, the state government took approximately $42 million from the consolidated rental bond interest held by the RTA and applied it to the delivery of social housing. This was a worthy cause, of course, but subsidised housing and renter support services are two different things.
A new government that came into power in the state in 2015 introduced a new tenancy advice program called the Queensland Statewide Tenant Advice and Referral Service (QSTARS).
“The funding for this program came from consolidated revenue, but there was still transparency over how much interest was made on rental bonds, and what that was used for and applied to. But during some of this time, bonds were earning very low interest rates,” Carr says.
Governments should deliver tenancy advisory services funded by bond interest, or return interest back to tenants
Tenants Queensland CEO Penny Carr
The low rates of return combined with the siphoning off of $42 million for social housing put significant strains on the RTA budget, to the point where – as with the NSW Rental Bonds Board – it struggled to break even.
Things changed again in 2022, when the Queensland Government decided that the RTA would no longer be funded directly by interest on rental bonds. Instead, the interest would go straight to the state government.
The RTA is now required to make a request to the government for funds to operate every year. The government also decides how much funding to provide for QSTARS. Tenants Queensland opposed the 2022 changes.
“The new process lacks transparency, and it’s unclear if there is any public disclosure of how much interest is being generated on bonds and where this money goes,” Carr says.
“Governments should deliver tenancy advisory services funded by bond interest, or return interest back to tenants.”
This was the intent when the Queensland Rental Bond Authority (the predecessor of the RTA) was established in 1989, and returning some interest to renters was also in the plan. But all of this has fallen by the wayside.
“It was more palatable when there was a direct link between bond interest and tenancy advice funding,” Carr says.
Speaking in his capacity as a spokesperson for the National Association of Renters’ Organisations (a coalition of state and territory tenants’ unions and advisory services across Australia), Leo Patterson Ross says the time has come for governments to come clean about where the interest from rental bonds is actually going.
“If renters are asked to give up weeks of rent as bonds then renters should be able to see that this money is being put to good use,” Ross says.
If renters are asked to give up weeks of rent as bonds then renters should be able to see that this money is being put to good use
Tenants Union NSW CEO Leo Patterson Ross
“Most states publish information covering rental prices and numbers of rentals in a way that is more authoritative than data based on advertisements.” Ross says.
“Transparent data releases should also be a feature of the bonds system. We want to see the returns used to support a fair renting system, especially by ensuring renters have access to high quality advocacy and support services.”
It’s a noble aspiration, but for the time being the millions of dollars generated by rental bond investments can go wherever state governments decide.
Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn
Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn
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