.State lawmaker proposes security deposit cap

Most renters know securing housing isn’t as simple as finding the perfect place.

California’s renters must save up thousands of dollars to provide security deposits that can legally be as much as two months’ rent, or three months’ rent for furnished units.

Add in the requirement that renters put up the first month’s rent before they can move in and low-income families are most likely to give up hope of finding a home.

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The state Assembly on May 22 passed a proposal that could change that.

Assembly Bill 12 would limit security deposits to one month’s rent, regardless of whether a unit is furnished or not. If the bill passes and gets Gov. Gavin Newsom’s signature, California could become the 12th state to limit security deposits.

“Security deposits present barriers for people to move into apartments, which can lead them to stay in apartments (and) in homes that are too small, crowded or even unsafe,” said Matt Haney, the assemblymember from San Francisco who authored the bill. “In other cases, people take on debt or financial burden that leaves them unable to afford other necessities.”

Haney said the bill has attracted widespread support in the Assembly, including from lawmakers who are landlords, as well as from labor organizations representing teachers, nurses and grocery store workers.

Assemblymember Diane Dixon, from Newport Beach, was among the Nos in the 53-14 vote. She cited concern about the bill’s potential to reduce the housing supply.

“The more we over-regulate people’s ability to offer a successful product, the scarcer it will become,” she said in a statement. “Landlords charge security deposits to cover potential damages and any unused funds are returned to the renter.”

Haney said the issue caught his attention when a janitor in his district described living with his wife and three children in a one-bedroom apartment.

“He wanted to move into a larger unit so his kids didn’t have to sleep in the same room as him and his wife,” Haney said. “He said he could afford the rent, but he couldn’t afford the deposit and first month’s rent to move in. Unfortunately that’s not an uncommon situation.”

In California, the median rent for a two-bedroom apartment is $2,538 and for a three-bedroom home is $3,795, according to Zillow. For a $3,000-a-month unfurnished unit, a landlord can charge as much as $9,000 for a security deposit and the first month’s rent.

“People are being asked to pay the equivalent of the down payment of a home in many parts of the country just to move in,” Haney said. “It’s really untenable.”

1 COMMENT

  1. What does “afford the rent” mean? Because if you can pay $3000/month in rent, but not have $9,000-12,000 for a deposit, then how does one handle emergencies? broken car, medical bill, vet bill, child care emergencies, family member help, etc. It sounds like one doesn’t have savings, and isn’t making enough per month to start saving. The cost of housing has gone up higher than the increase in wages. It’s ok to say housing is out of budget, and the solution is to make more money. There are many contributing factors to housing shortages, but capping deposits wont help supple. Note- if the recommendation is spend 30% or less of gross income on rent, then an average $3000 on rent spending 30%, means making $120,000 a year, which is not the average here or low income.

    If you are a landlord who happens to rent out your second home (you were lucky enough to upgrade from a starter home), then you aren’t expecting to make a profit- not until you sell your 2nd home as an investment. The rent covers mortgage, property tax, and some maintenance. A renter who puts huge wear on house, or has an emergency and can’t pay a month, eviction process, is a landlord’s loss – hence the deposits protecting land lords. Landlords will have to be more careful about who they rent to, reducing supply to minorities and low income. Capping renters deposits to one month of rent- versus 2 months deposit that already exist (and 3 for furnished) only helps large property managers make money since they spread there losses across multiple properties. The bill needs to exempt homeowners who rent out a single room, a guest house, less than 3 houses (or bill should not go through at all because it will make housing worse).

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