Lawmakers across multiple states are considering legislation to reconfigure the often burdensome security deposit structure that adversely affects renters of less financial means, according to the Wall Street Journal.
Insurance policies that would replace traditional cash up-front deposits are an alternative being considered by both industry and government figures.
New York, Ohio, and Virginia lawmakers all have introduced security deposit-focused legislation designed to help renters in markets often without designated, affordable and low-income housing.
Alabama, Connecticut, and New Hampshire representatives say they will follow suit this year with a similar legislative approach. California, New York, and Oregon also have new tenant-focused legislation to limit rent increases and protect individuals from evictions.
As other changes attract investors to disrupting current rental business models, industry source Apartment List cites rents increasing 36% nationally throughout the 2010s. As many as one fourth of all renters in the United States devote 50% or more of their monthly expenses to rent.
“For a significant number of people living in Cincinnati, a security deposit for a two-bedroom would equal or exceed the totality of their savings,” said Cincinnati City Councilman P.G. Sittenfeld. “To put down $1,000 up front, that’s a significant expense for some people.”
Advocates for lease agreement changes point out how local economies could be stimulated with larger amounts of residents’ money not tied up in landlord’s security deposits.
“We’ve been looking for any and all options to allow our workforce families to continue to live here,” said supporter Ryan Coonerty, a district supervisor in Santa Cruz County, CA. “If you can get a couple thousand dollars in people’s pockets, that can make a big difference.”
A number of landlords already let tenants utilize other arrangements, including insurance, rather than traditional cash security deposits. But other landlords note that these alternative plans could expose them to long legal fights and high expenses with insurance companies.
“Now I’m in a whole different realm,” said Charles Tassell, chief operating officer of the National Real Estate Investors Association. “I’ve got to deal with an insurance claim and get my attorneys involved. And they’ve got their high-priced attorneys in-house.”