California landlords can’t charge more than one month’s rent for security deposits on their rentals starting July 1, when a new law takes effect.
“When renters can’t afford deposits, they often have to borrow from predatory lenders, go into debt, or just stay put,” Mr. Haney, who chairs the Assembly Renters Caucus, said in an April press release.
He referenced San Francisco, where the average two-bedroom apartment rents for $5,000 a month, meaning a move-in cost of $15,000, according to the San Francisco-based Democrat. Mr. Haney said that red and blue states alike, including New York, Kansas, Hawaii, and Alabama have already capped security deposits at one month’s rent.
Under the new law, landlords who own one or two properties, totaling no more than four rental units, would still be allowed to charge two months’ rent for security deposits, except when renting to military veterans, according to an Assembly analysis of the bill.
Supporters of the bill—including the California Nurses Association and the UC Student Association—said in an analysis that high security deposits make renting unattainable for some and can force people into homelessness or unfavorable situations, like living in a house with multiple families.
The Western Center on Law and Poverty—a Los Angeles-based law firm that represents low-income Californians—is also in support, saying homeless or low-income people can’t afford to move into an apartment in California when faced with a high deposit plus the first and last month’s rent.
“The average California rent statewide is about $2,950, which means a tenant has to pay about $5,900 upfront, not including application fees, miscellaneous fees, pet deposit, and first and last month’s rent. For unhoused and low-income people, getting that money together can be the main factor determining whether they can rent an apartment,” officials for the center wrote in an Assembly analysis.
Opponents of the new law said that without the safety cushion of a larger security deposit, landlords will be more selective and require higher credit scores for renters.
“They’re going to require higher credit scores. They’re going to require higher verification of income, and it’s going to squeeze out the bottom,” Chip Ahlswede, vice president of external affairs for the Apartment Association of Orange County, told The Epoch Times in an interview last year.
Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, said reducing the amount of a security deposit is not the way to create more affordable housing.
“In fact, it’s going to have the exact opposite impact that the Legislature wants it to have ... because owners aren’t going to be able to balance the risk of taking on a tenant that may not quite meet their financial criteria. They’re just going to be denied,” he said.
