NSW State Budget 2026-27: Renters' bonds

There are many aspects of the NSW State Budget we could talk about, but we want to draw your attention to just one thing. What is going on with renters bonds?

Today we saw the release of the NSW State budget for 2026-27 and amongst the cost of living efforts, and revenue being down on expectation, there's also an elephant in the room that more people need to be talking about. The NSW Government is choosing to forego up to $200 million a year in revenue that wouldn't cost government or the community a thing: the interest on renters bonds. 
 

The budget papers show the NSW government expects to hold more than $2.5 billion in renters bonds, but these funds are currently generating no interest to support renters or the rental sector.

The budget papers show the NSW government expects to soon hold more than $2.5 billion in renters bonds, but these funds are currently generating no interest to support renters or the rental sector. The $75 million being sent back to the Rental Bond Board from Treasury, is equivalent to just a 2.9% return – less than the rate of inflation of 4.2%. In real terms this means government is actually losing renters' money that they are supposed to hold in trust.
 

If 80% (i.e. $2bn) of the funds NSW Treasury is currently holding had been in the government's primary investment vehicle OneFund, this would have created more than $200million in the last 12 months. Instead it has earned... $0.

If 80% (i.e. $2bn) of the funds NSW Treasury is currently holding had been in the government's primary investment vehicle OneFund, this would have created more than $200million in the last 12 months, as well as maintaining a significant reserve to ensure the Rental Bond Board is still able to return bonds as needed at the end of tenancies.

Given the budgetary pressure on both renting households and on government, it is deeply disappointing that the NSW government is not taking action to increase the funds available to it. In a housing crisis it's just not helpful to leave money on the table that could be generating a return and helping renters through this crisis.

This is money that could be spent on supporting the Tenants' Advice and Advocacy Program which is currently funded for less capacity than we had in 2008, and on improved compliance and enforcement efforts from the Rental Taskforce to make sure renters are protected from poor behaviour. It could even be used to cover the $25 fee on the new Smart Rental Bonds starting in a few months time!

The Tenants' Union will continue advocating to the Rental Bond Board and NSW Treasury to ensure renters' money is being put to good use.

As we continue to look through the budget, we will update this post with other items of interest.