Can a Landlord Increase the Bond After a Rent Rise in NSW?

The Bond Is Locked at Commencement

Once a rental bond is lodged with NSW Fair Trading, the amount stays fixed for the life of the tenancy. Section 161(2) of the Residential Tenancies Act 2010 makes it an offence for a landlord to request or receive additional bond payments — a "top-up" — during an ongoing tenancy.

This rule applies even after a lawful rent increase. If the weekly rent rises from $550 to $650 per week, the four-week cap would calculate to $2,600 at the new rent, but the bond remains at the original $2,200 that was lodged when the tenancy started. The landlord cannot ask the tenant to pay the $400 difference.

Why the Rule Exists

The prohibition prevents landlords from using rent increases as a lever to extract additional security from tenants mid-tenancy. Without the rule, every rent rise would come with a demand for more bond money — creating a cash-flow burden on tenants who've already met their security obligation.

The four-week cap under Section 159(1) only applies at the time the agreement is entered into. It sets the maximum based on the weekly rent as it stands when the lease is signed. After that point, the bond is a fixed deposit, and no subsequent change in rent recalculates it.

The Penalty

Requesting a bond top-up is an offence under Section 161(1)–(2), carrying a maximum court penalty of 20 penalty units — $2,200 at the current NSW rate of $110 per unit. The same penalty applies to requiring multiple bonds for the same tenancy or taking any additional security beyond the single statutory bond.

NSW Fair Trading can issue penalty infringement notices directly. A landlord who sends a tenant a letter saying "your rent has gone up, please pay the extra bond amount" has committed the offence whether or not the tenant actually pays.

What Happens at Lease Renewal

If a fixed-term lease expires and the tenant signs a completely new tenancy agreement at a higher rent, the question becomes whether this is a continuation of the existing tenancy or a genuinely new agreement.

In practice, most tenancies in NSW continue as periodic tenancies after the fixed term ends — there's no new agreement, just an ongoing tenancy under the same terms. The bond stays locked.

If a tenant vacates, the bond is refunded through the normal process, and a new tenancy agreement is entered into with a new bond calculated at the new rent — that's a new lodgement, not a top-up. But engineering a fake vacancy and re-sign to extract a higher bond would attract scrutiny from Fair Trading, particularly under the strengthened enforcement of the 2024–2025 reforms.

Practical Impact for Self-Managing Landlords

For long tenancies where rent has risen significantly over the years, the original bond can feel inadequate. A property renting at $400 per week five years ago might now be at $650 per week, but the bond is still $1,600 — less than two-and-a-half weeks' rent at the current rate.

This is a recognised trade-off in NSW tenancy law. The four-week cap protects tenants from excessive upfront costs, and the top-up prohibition prevents landlords from clawing back the difference during the tenancy. Your risk management tools are the condition report, routine inspections (maximum four per year, seven days' written notice each), and the end-of-tenancy claim process.

For the complete bond compliance framework — from the four-week cap through to NCAT disputes — see our NSW Rental Bond guide.

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