While a bond has long been a protection for investors against a nightmare tenant, it could be replaced by an equitable system if proptech providers and government agencies were on the same page, suggests an industry expert.
Speaking to Smart Property Investment as part of this month’s proptech special, Managed co-founder and director Nick Bouris explained how the government agencies are failing to keep up with emerging technologies.
Mr Bouris explained how the government blocked a radical plan to overhaul the bond industry by having tenants pay an insurance fee instead of paying a traditional bond.
“Obviously your protection now is four weeks’ rent. [A proptech provider] is saying tenants keep your bond, the tenant keeps that money, pays a 400-500 premium to an insurer and if something goes wrong the insurer will cover the bond damage,” Mr Bouris explains.
Through this proptech model, an insurer would protect the property owner from any potential damage to the property, while the tenant would save money by paying a smaller fee.
While the government eventually stopped the replacement of bonds, Mr Bouris believes it could have been better resolved by letting the market decide.
“It was good innovation, and while it had its critics it should have been the market that decided whether or not it was something we needed, wanted or found value in,” Mr Bouris continued.
Mr Bouris suggested blocking the bond highlights the current issues in the proptech space with government agencies being slow to keep up with emerging technologies.
“I think the major challenge in proptech right now is the various government agencies and people that sort of regulate it, I just don’t think they are keeping up with innovation,” Mr Bouris said.
“It actually takes them a long time, we’ve had to do a lot of education to all the various regulatory agencies around what we do, how we do it, what the benefits are and how we are more compliant than what’s been there in the past.”
As part of this month’s proptech focus, Mr Bouris also spoke to Smart Property Investment about how buyers, managers and sellers can all take advantage of the proptech industry.
“Successful investing in property is a process,” Mr Bouris said.
“It doesn’t end with the purchase – it’s buying, it’s managing and selling.
“For each part of that process, you’re generating a return or money that contributes to your overall return and there’s great technology to utilise at each stage,” Mr Bouris said.
The proptech advocate also discussed how the philosophy behind buying property in Australia has led to the nation having one of the most sophisticated proptech markets in the world.
“It’s actually interesting because we are such a small population, and I think we have the best proptech market in the world, and that has a lot to do with the fact that we’re totally obsessed with real estate here in Australia,” Mr Bouris said.