Recently, some lawmakers have been proposing alternatives to the traditional security deposit in an effort to help tenants by eliminating the need for a large, upfront payment. But some housing experts say this could actually end up costing renters more money in the long run.
Charles Tassel, chief operating officer of the National Real Estate Investors Association, told Fox Business this week that legislators in some states have been trying to do away with security deposits through a number of “misguided, feel-good laws” that could have serious long-term implications for renters.
“Either the rents go up or the standards for renting go up, which means people on the margins are less likely to be able to rent,” Tassell said. “In short, what [owners] are going to do is … protect their assets.”
As Realty Biz News reported last week, some local lawmakers are increasingly targeting security deposits. In Cincinnati for example, lawmakers there have introduced a new law that gives renters the option of paying a security deposit up front, splitting the security deposit into payments that are made over six months, or buying security deposit insurance instead.
The last option might be especially appealing to some renters as the initial payments are very low. But Tassell said it was risky for renters.
“[They] don’t wants to pay $500 up front, so they pay $3, $5, $10 every month instead,” Tassell said. “And when they move out, the company is going to come back and say ‘Hey, you need to pay for the $300 of damages.’”