Rental community start up, Snug.com today officially launched its #BetterBonds campaign calling on State Governments to enable bond guarantee alternatives such as its BondCover product.
BondCover swaps an old-fashioned cash rental bond with a low cost certificate of guarantee, backed by Snug and IAG (Insurance Australia Group).
BondCover provides the same protection as a bond by guaranteeing that the owner will be paid for a valid claim under the lease up to the amount of the bond. BondCover retains similar bond claim process, rights, and obligations for renters and owners. Claims up to $500 are settled within 2 business days and up to the bond amount within 5 days.
"With 1 in 3 Australian's now renting, the Governments' slush fund of cash rental bonds has amassed to more than $4 billion dollars nationally. Imagine if this money could be reinjected back into the economy with more Australians having access to their own money today," Snug Founder, Justin Butterworth said.
Butterworth who founded Australia's first online holiday rental ecommerce marketplace said, "I've rented 6 times over 12 years in Sydney without claim, why do I still pay thousands of dollars in rental bond cash? Like the very large majority of renters, I do the right thing.
"Cash bonds are effectively a tax on renters. The bond system is completely out-dated, inefficient and unfair. It's time for Australian State Governments to recognise good renters with guarantee certificates like BondCover.
"In 2018, the days of the cash bond are over. We now have the data and technology to better manage identity, reputation, and recourse to create a more efficient securitised rental bond system that looks after owners and renters, both dealing with increasing costs of living.
"Snug's BondCover product has been designed to comply with existing rental tenancy legislation and relevant financial services and insurance regulations. BondCover is a win-win-win for renters, owners and agents. BondCover is good news for rental affordability, and it's a stimulus to the economy with strong consumer benefits," Justin Butterworth said.
- Renters can purchase BondCover for around 5 per cent of the face value of the rental bond, and are provided with a certificate of guarantee to give the owner or agent to replace a cash bond. So, a current renter with a $2000 bond could obtain BondCover for around $100 per annum, and receive their $1900 cash back. Discounts apply for no claims and loyalty renewals, and pricing is based on property attributes.
- BondCover was conceived when Snug research on nearly 2 million bonds uncovered that 99 per cent of renters by value do the right thing: around 80 per cent of rental bond value is refunded without claim, around 19% per cent is largely negotiated then resolved between parties for claims under $300 and of the 1-2% that head to the Tribunal the large majority of renters pay.
- In building its platform, Snug also conducted extensive legal and actuarial research, and engaged with numerous state governments. Its focus group research on hundreds of renters found that renters are most concerned about their rental reputation and ability to rent their next property, driving their good behaviour.
Questions and Answers
- $4 billion in rental bond cash is held by government at great expense to renters.
- 1 in 3 Australians rent because home ownership is becoming unaffordable.
- Snug's wants to make renting easier and address housing affordability. Snug is developing a range of market based digital products and services to improve housing accessibility in Australia.
How does BondCover work? BondCover swaps your traditional cash bond with a certificate of guarantee. It works by reviewing your rental history and upon approval from your property manager/owner allows you to swap your current cash bond for a low cost certificate of guarantee. Renters can buy BondCover for around 5-9% of the face value of a bond, which guarantees an owner that a valid bond claim will be paid.
What are the benefits for renters? Renters save their rental bond cash and can establish their rental reputation to use in the future. If a claim arises renters can take comfort in a transparent and fact based claims process. Discounts up to 80% off, apply for no claims and loyalty.
How are owners protected? Snug conducts a risk assessment before issuing BondCover to a renter. BondCover provides similar protections as a cash bond for valid claims permitted under the lease agreement, with the benefit of indexing the cover to the current rent.
What happens if there is a claim? The owner first puts the claim directly to the renter. If that is unsuccessful, the owner can upload the claim to Snug for assessment and resolution. Snug seeks the renter's response before making a claims assessment. Claims under $500 are paid within 2 days and amounts up to the bond amount within 5 days.
How does this differ from insurance? BondCover is a surety product and is neither insurance nor a loan. If a bond claim arises, BondCover is a guarantee for the owner that Snug will pay valid bond claims if renters don't. Renters still have to reimburse the full amount of the bond claim to Snug.
What is the benefit to the economy? BondCover enables renters to better use precious capital for savings, paying off debt, studying or investing. BondCover has the potential to reduce the cost to government operating an old fashioned cash bond system and the number of tribunal cases.
Who is behind Snug's BondCover? BondCover is issued by Snug Financial Services and is underwritten by IAG, Australia's largest insurer. Note BondCover Terms and Conditions Apply.
About Snug - Snug is delivering a housing as a service (HaaS) through a rental community platform that brings owners, renters, and property managers together by reimagining the renting journey, delivering lower cost and better value experiences. The outcome is a more transparent, efficient, flexible, fair and affordable rental system for all Australians. When renting feels good, it's Snug. www.snug.com
About Justin Butterworth - Justin is an entrepreneur; active angel investor, Non Executive Director and mentor for leading Australian start ups focused on marketplaces and SaaS. Justin self funded and launched Australia's first online holiday rental ecommerce marketplace in 1999 and sold the business to Stayz/Fairfax in 2011 for $29m. At Stayz, Justin held executive leadership positions in business development, regulatory affairs, sales and customer experience. He led the acquisition and rapid growth of the SaaS business YesBookit.
Justin held senior management positions at the global short- term rental leader HomeAway.com (NASDAQ: AWAY) for 2 years following the acquisition of Stayz and YesBookit. Currently Justin is building his second internet venture, Snug, whose mission is to reimagine the renting experience. Snug's goal is to bring respectful transparency, communication and trust to a broken rental system. Snug brings owners, renters and managers together.