Most renters know that insuring a home isn’t as simple as finding the perfect spot.
California renters must save thousands of dollars to provide security deposits that can legally be as much as two months’ rent or three months for furnished units.
Add in the requirement that tenants pay the first month’s rent before they can move in, and low-income families are more likely to give up hope of finding a home.
The state Assembly on May 22 approved a proposal that could change that.
Assembly Bill 12 would limit security deposits to one month’s rent, regardless of whether the unit is furnished or not. If the bill passes and gets Gov. Gavin Newsom’s signature, California could become the 12th state to limit security deposits.
“Security deposits present barriers to people moving into apartments, which can lead them to stay in apartments (and) houses that are too small, crowded or even unsafe,” said Assemblyman Matt Haney, D-San. Francis who drafted the bill. . “In other cases, people fall into debt or take on a financial burden that leaves them unable to meet other needs.”
Haney said the bill has drawn broad support in the Assembly, including from lawmakers who own landlords and labor organizations representing teachers, nurses and grocery store workers.
Assemblywoman Diane Dixon, a Newport Beach Republican, was among the Nos in the 53-14 vote. She cited concerns about the bill’s potential to reduce housing supply.
“The more we overregulate people’s ability to deliver a successful product, the more scarce it becomes,” he said in a statement. “Landlords collect security deposits to cover potential damage, and unused funds are returned to the tenant.”
as a down payment
Haney said the problem came to his attention when a janitor in his district described living with his wife and three children in a one-bedroom apartment.
“He wanted to move to a bigger unit so his kids wouldn’t have to sleep in the same room as him and his wife,” Haney said. “He said he could pay the rent, but he couldn’t pay the deposit and first month’s rent to move out. Unfortunately, that’s not an uncommon situation.”
In California, the median rent for a two-bedroom apartment is $2,538 and the median rent for a three-bedroom home is $3,795, according to Zillow. For a $3,000 a month unfurnished unit, a landlord can charge up to $9,000 for a security deposit and the first month’s rent.
“People are being asked to pay the equivalent of a down payment on a house in many parts of the country just to move,” Haney said. “It’s really unsustainable.”
Tina Rosales, a housing attorney and policy advocate with the Western Center on Law & Poverty, said the bill could help combat homelessness.
He found an apartment in San Francisco that asked for $10,000 upfront, including a security deposit, first month’s rent, and fees.
“That’s a lot of money for anyone,” he said, “but especially for low-wage workers, and particularly for Black, Latino and Native American households. No one can afford a home at market rate, plus the first, last, and two months of security deposits, plus other excessive fees that landlords may charge.”
Alternatives to security deposits
Debra Carlton, a spokeswoman for the California Apartment Association, said the homeowners group is disappointed that Haney hasn’t considered alternatives.
“The vote on the bill came earlier than we thought, and we were hoping that he would work with us to maybe find a different solution, but obviously that didn’t happen,” he said.
Carlton said security deposits are important because they allow owners to pay to repair damage to units. And, in the event an eviction is necessary, deposits help landlords cover those costs. The average judicial eviction can take up to six months and cost an average of $10,000, the association said.
Carlton suggested that renters participate in insurance or bond programs, which could help cover potential damage, like security deposits.
“People are being asked to pay the equivalent of a down payment on a house in many parts of the country just to move.”
— Matt Haney, Democratic Assemblyman from San Francisco
He added that the bill could force landlords to raise rents and become stricter when vetting tenants, ultimately making it harder for tenants to find housing.
Haney said his staff has met with the California Apartment Association and is willing to talk to them, but believes the limits are necessary.
He said he would consider amending the bill to exempt landlords who rent out a single room or a guest house.
CalMatters.org is a non-profit, non-partisan media company that explains California policies and politics.