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April 8, 2013 | by  | in News |
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Interest Captured

How much is the government making from your bond money?

Nearly $20 million earned from your bond money is going straight to a Government department, new figures show.

Data obtained by Salient, from an official Information Act request by VUWSA Vice-President (Welfare) Simon Tapp, show the financial state of the residential tenancies trust Account (RTTA).

A total of $367,311,000 is held in bond, an average of $1140 for over 430,000 individual bonds.

The RTTA earned over $18 million in interest in the last financial year, all of which is paid to the Department of Building and Housing, now part of the Ministry of Business, Innovation and employment. RTTA revenue is gathered solely from interest on investments.

All investments are held in Westpac, ANZ, BNZ, ASB and National Banks, and all revenues of the RTTA are exempt from taxation. The effective interest rate on the bank deposit holdings is slightly more than five per cent per annum.

The stated aim of the Department of Building and Housing (DBH) is to improve building quality and housing availability in New Zealand. Tapp said he would like to see dialogue around using the money to help meet the aims of the DBH.

“[The money could] fund a smart loan scheme to help expand the Warm Up New Zealand programme, or [it could be used] to help landlords bring their properties up to a certain minimum standard for rental properties.

“that’s a huge sum of money that won’t all be drawn down simultaneously, so you can afford to be a bit innovative and progressive in helping to improve new Zealand’s housing stock, which we know would really help students,” said Tapp.

Bond is held to cover unpaid rent, tenants’ damage to the property, or any other claim by the landlord. Landlords are legally bound to lodge bonds with the Department of Building and Housing, to prevent cavalier or illegal practices with bond money.

Tenants with bond or other rental issues can appeal to the tenancy tribunal. For more information, visit dbh.govt.nz/tenancy-tribunal.

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