Editorial: Security deposit options remove affordable housing barriers

Enquirer editorial board

The simple tricks every renter needs to know to get their security deposit back

Shelling out $600 to $1,200 for a security deposit in addition to the first month's rent can be a real barrier to affordable housing for lower-income renters in Cincinnati. That's why City Council should get behind an ordinance proposed by Councilman P.G. Sittenfeld that would remove that upfront barrier and give hundreds of renters in the Queen City a better shot at landing in housing they feel good about.

Sittenfeld's "Renter's Choice" proposal, which council is expected to vote on Wednesday, would provide landlords and renters with a three alternatives to the traditional upfront security deposit, which is usually equivalent to 100% of the first month's rent. Those options are:

Rental security insurance. Tenants could pay a nonrefundable monthly fee (as little as $3 a month) to a certified, licensed insurance provider instead of a security deposit. The insurance provider covers the apartment, paying the landlord for any damages.
An installment plan. Tenants would pay the security deposit over a period of no less than six months. For example, instead of paying $900 upfront, a tenant can pay $150 per month for the first six months, making it significantly more manageable.
Pay a reduced security deposit. If a landlord stills desires to get money upfront, it can be no more than the equivalent of 50% of the first month's rent. So instead of paying $900 upfront, a tenant would pay no more than $450 upfront.

Tenants would get their money back at the end of the lease under every option except rental security insurance. Each option dramatically reduces the upfront costs for renters, which some might not have on hand. The legislation also allows landlords to choose the option they prefer once a tenant indicates they want to forgo the traditional security deposit instead of mandating a specific alternative.

Cincinnati City Councilmember P.G. Sittenfeld listens to proceedings, Wednesday, March 13, 2019, in council chambers at Cincinnati City Hall.

We also like the fact that Sittenfeld's proposal exempts landlords who own 25 units or less from the regulations. The city shouldn't overburden landlords with one or two units who don't have the financial or administrative capacity to meet the requirements of the new law.

Still, many landlords might chafe under this proposal. Some will say the legislation is a solution in search of a problem, and that there's no real outcry for such a remedy. The Greater Cincinnati Northern Kentucky Apartment Association argued that Cincinnati is not New York or California, where security deposits can range thousands of dollars compared with $250 to $500 here. Besides, many conscientious landlords are already working with tenants by utilizing installment plans for deposits.

But this editorial board also got to hear firsthand from local renters who talked about what it's like living paycheck to paycheck and how challenging it can be to come up with an upfront security deposit, even one as low as $200. They shared how the cost of rent and security deposits can limit their housing options to certain parts of the city (namely the West Side), and can create challenges for them with access to transportation, employment and education for their children.

We credit the councilman for the thoughtful and collaborative process in which he engaged landlords and tenants to get to this point. The legislation, which Sittenfeld calls "the first of its-kind in the nation," has gone through several revisions, addressing several of the concerns landlords had with the initial proposal. The latest version has gotten the endorsement of the Real Estate Investors Association of Greater Cincinnati, according to Sittenfeld.

It is our hope that Sittenfeld, council, landlords and tenants will continue to collaborate and tweak the legislation, even once it's passed, in order to perfect it. In a city heavily populated by renters, City Council must remain focused on putting forth legislation that insures people have access to affordable housing and affordable housing options across our city.

Sittenfeld's "Renter's Choice" proposal does just that by removing what can be a steep financial barrier for some.