Cincinnati is taking the lead in the nation to reduce financial barriers for renters looking to move into a new home, with more jurisdictions considering similar measures.
Introduced by councilmember P.G. Sittenfeld and passed with bipartisan support on Jan. 15, the Renters Choice legislation provides renters with alternatives to the traditional security deposit. The legislation goes into effect April 14.
Upon a renter’s request, landlords in Cincinnati who own or control over 25 rental units will have to offer at least one of three alternatives to the required security deposit. This includes rental security insurance, where the renter pays a third-party provider approved by the Ohio Department of Insurance that then insures the property against damage; payment of the security deposit over a series of no less than six equal monthly installment payments; and payment of a reduced security deposit, which cannot be more than 50% of the monthly rental rate.
While the legislation benefits renters, it’s also being applauded by industry firms that offer rental security insurance options.
"Renters have been struggling for years to afford rising rents and costly security deposits, especially in large cities and growing urban areas like Cincinnati,” says Reichen Kuhl, co-founder and CEO of LeaseLock, which provides A-rated lease insurance programs that eliminate security deposits, surety bonds, and guarantors in rental housing. “It's no surprise that legislators have been stepping up to make leasing more affordable by providing constituents at least some relief from the financial burden of moving into a home. These legislative changes are yet another sign of the nationwide movement toward—not just regulating and restricting deposits—but eliminating security deposits entirely.”
Mike Rudoy, CEO and co-founder of Jetty, a financial services company on a mission to make renting a home more affordable and effortless, adds that the legislation is an “exciting turning point as more and more municipalities follow suit in efforts to make renting more affordable.”
“By replacing cash deposits, qualified renters will be able to access units they might not otherwise have the liquidity for at lease signing,” he says. “By using products like Jetty, property managers can benefit from a significant increase in protection and conversion rates, as well as a reduction of bad debt. It’s critical that properties educate themselves on the nuances between offerings.”
Department of Housing and Urban Development secretary Ben Carson has also said in the past that these security deposit alternatives can help address the nation’s affordability crisis.
Earlier this month during his State of the City Address, New York City mayor Bill de Blasio unveiled his administration’s vision for ensuring New Yorkers can continue to call the city home. One of his proposals focuses on eliminating security deposits to aid those New Yorkers who work hard to afford rent but don’t have upfront cash for the security deposit.
The proposal calls for: “Starting with up to 60,000 city-financed homes, we will offer renters a choice to pay a security deposit or to sign up for renter security insurance that allows small monthly payments or a smaller single upfront payment in lieu of the full month deposit. We will also pursue local and state legislation to expand these alternative options citywide to all of New York’s 2.2 million rental households.”
Other states like Virginia, Connecticut, North Carolina, Alabama, and New Hampshire are gearing up with their own legislation.