Mayor Bill de Blasio is taking a cue from Cincinnati: He wants to give some renters an alternative to paying a hefty security deposit upfront.
During his State of the City address, the mayor is expected to pitch a plan to offer renters of city-financed homes a “choice to pay a security deposit or to sign up for renter security insurance,” according to the mayor’s office. The change would mean some renters — in an estimated 60,000 homes or so — could pay a lower, nonrefundable monthly fee instead of a deposit.
The mayor will also “pursue local and state legislation to expand these alternative options citywide to all of New York’s 2.2 million rental households,” according to a press release from his administration.
Last month, Cincinnati became the first city in the U.S. to require landlords to accept alternatives to traditional security deposits, including rental security insurance. Other states, including Virginia, Alabama and New Hampshire are mulling similar measures, according to the Wall Street Journal. In June, as part of a broader overhaul of the state’s rent law, New York capped security deposits at one month’s rent.
The news comes just one day after The Real Deal reported that renters in New York will no longer have to pay fees for brokers hired by their landlords. The Department of State issued guidance on the state’s rent law, pointing to language in the Housing Stability and Tenant Protection Act of 2019 that barred landlords and their agents from accepting “payment, fee or charge before or at the beginning of the tenancy.”
A few New York-based start-ups, including Obligo, Rhino and Jetty, have built their business models around eliminating security deposits, largely by offering an insurance option.
The Rent Stabilization Association’s Mitch Posilkin said he wasn’t familiar with the mayor’s proposal, but noted that his organization supports alternatives like those provided by Rhino.
“The bottom line is that an owner needs to be protected,” he said.
Write to Kathryn Brenzel at kathryn@therealdeal.com.