Fewer landlords are insisting on a security deposit, and are instead coming up with alternative ideas that might help out new tenants who’re struggling to come up with the amount necessary.
Landlords
generally insist on security deposits in order to protect themselves
against any damage caused to the property, or missed rental payments.
But the problem is that the large upfront payment can be difficult
for tenants, who’re already spending an average of $3,400 on moving
costs according to research from Hotpads.
Another
problem with security deposits is they can cause tension if the
landlord decides to withhold some or all of it, but the tenant
disagrees.
This
explains why some states and local governments have passed new laws
that limit security deposits. In Seattle for example, the law there
limits the amount to no more than one month’s rent. New York has a
similar rule.
But landlords can’t be expected to just let tenants move into their properties without some kind of assurance, which is why they’re coming up with alternatives, Forbes reported.
One
idea is to give tenants the opportunity to buy surety bonds instead
of paying the security deposit. The idea is that the renter pays a
portion of the security deposit first of all, with that amount going
into a larger pool of funds to cover any damage or rent loss. This is
a nonrefundable upfront fee. What this means is that renters can save
money when they first sign a lease, but they may have to pay more
later on. If landlords find damages from the renter once they move
out, the bonding company will pay to fix those damages. They’ll
then require the renter to pay for reimbursement.
A
second idea promoted by some landlords is to use lease insurance.
With this, residents can effectively pay a monthly fee instead of
stumping up the full security deposit when they first move in. The
tenant pays a small amount each month, and the landlords is covered
in case of any damage or missed rental payments.
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