Excessively high apartment rental security deposits are contributing to the affordability crisis, NYC Comptroller Scott Stringer said today as he proposed reforms to lower barriers to housing for renters.
"Every day, New Yorkers are working harder and saving less—and right now, huge portions of their annual incomes are being held hostage in security deposits. These may just be considered the costs of being a renter in New York, but it's not right and it's not necessary," Stringer said on Sunday. His office found that "$507 million were tied up in security deposits in 2016 alone."
It's not unusual for NYC landlords to demand multiple months rent from tenants in advance before agreeing to lease. Stringer believes security deposits should be capped at one month for one-year leases. While there are stories about renters being able to negotiate free rent or lowered security deposits, that's more often the case for renters who can afford to negotiate. Low-wage or low-credit renters are the ones most likely to be targeted by landlords for additional security deposit.
The comptroller wants NY State to pass legislation to formalize a one month security deposit cap, which Alabama, North Dakota, Massachusetts, New Hampshire, South Dakota, Kansas, Nebraska, Rhode Island, Delaware, and Hawaii already have. His wish list of reforms also includes the option of paying security deposits by installment plans and the wild idea of making sure you actually your security deposit back. From the Comptroller's office:
Reducing Upfront Costs and Expanding Tenant Choices
: While it is important that landlords have security against damages or unpaid rent, an upfront deposit is not the only way this can be achieved. Comptroller Stringer is proposing that City and State legislators empower tenants to manage their security deposit obligations with a range of different, opt-in strategies, including:Installment plans
: Tenants should have the option to pay security deposits in installments rather than covering the full burden all at once. In Seattle, for instance, renters are allowed to pay in six installments, so that a tenant could add $300 to their first six rental payments, rather than paying $1,800 up-front. This installment model can also be extended to other upfront costs, like pet deposits, last month’s rent, and move-in fees.Insurance as an alternative to the security deposit
: A number of local companies have introduced an insurance alternative in recent years. These start-ups allow renters to pay a small monthly or one-time fee in exchange for guaranteeing their security deposit with landlords. While tenants will not receive this money back - as they would with a traditional deposit - paying $10 per month to insure your apartment against damages rather than an $1,800 security deposit is a significant reduction in the upfront costs of moving and can be a desirable trade-off. Moreover, tenants who have already paid their security deposits can request that it be returned and can switch to the monthly payment, insurance model instead.Maintaining the status quo
: Likewise, if a tenant prefers to pay a full month’s security deposit with a single check, that option should be preserved and protected.
Getting back the security deposit: Too often, security deposits are withheld from tenants at the end of a lease for arbitrary, unexplained, or fraudulent reasons. To combat bad actors and ensure fairer outcomes, New York City can follow the lead of England and create a tenant protection system where security deposits are held by a third-party custodian and arbiter rather than the landlord.
- If the landlord wishes to withhold money for damages, cleaning fees, or unpaid rent at the end of a lease, they must come to an agreement with the tenant. In instances where there is a dispute over damages or the cost of repairs, the landlord and tenant can utilize the dispute resolution service run by the third-party organizations that hold deposits. These services cost nothing but require both parties to agree to be bound by the decision.
You can read Stringer's report in full here.
Judith Goldiner, Attorney-In-Charge of the Civil Law Reform Unit at The Legal Aid Society, issued a statement supporting Stringer's proposal, saying, "Our clients spend huge portions of their incomes on security deposits sacrificing groceries, medicine, and other necessities. Moreover, the road to getting back one’s deposit back isn’t a guarantee either, and unscrupulous landlords look for any opportunity to profit off our clients and pocket the security deposit at the end of the lease."
If you're having trouble getting your security deposit back, contact the NY Attorney General's office. The NY AG website states, "The Office of New York State Attorney General offers, as an alternative to filing a lawsuit, a mediation service to assist tenants in recovering rent security deposits and interest. To access the Office’s mediation service, simply file a rent security complaint form with the Office of the New York State Attorney General, Bureau of Consumer Frauds and Protection at 28 Liberty Street, 15th Floor, New York, NY 10005."