Bill Aims to End ‘Cash Crunch’ of VA Rental Security Deposits
Friday, January 24, 2020
RICHMOND, Va. - With the skyrocketing cost of housing, a Virginia lawmaker has proposed an alternative to the traditional apartment security deposit.
House Bill 1333 aims to let landlords accept security deposit insurance instead of what can amount to thousands of dollars for first and last month's rent. Del. Mark Keam - D-Fairfax, who introduced the bill last week, says his plan solves two problems: providing landlords with security for damages, and giving renters a much less expensive way to move in.
"The most important problem that we're facing is the lack of affordable housing," says Keam. "And the cash crunch of coming up with two months' worth of security deposit is a barrier to many people who would like to move out on their own."
He notes that insurance premiums would most likely be less than $13 a month on a $2000/month apartment. Landlords in New York have welcomed damage insurance provided by start-up firm Rhino, and other companies offer similar products.
Keam's proposal is based on a cutting-edge ordinance passed in Cincinnati this month. It's the first in the nation to give renters the option of paying security deposits in six monthly installments, or getting damage insurance.
Keam says more than $45 billion is tied up in security deposits in the U.S., money that could be in renters' savings accounts. As rents rise across the country, he predicts these alternatives to big security deposits will gain wider attention.
"If we can pass this bill, it's another way of showing that policymakers in Virginia, and the businesses and government, both want to work together to help consumers in an innovative way," says Keam.
A report last summer found the number of Virginians who spend more than 30% of their income on housing is growing, and median rent in the Commonwealth has risen three times as fast as household incomes from 2014 to 2018.
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