On October 8th Atlanta, Georgia made a drastic change to their security deposit legislation, giving tenants more options. Dubbed the “Renter’s Choice Bill”, tenants can now choose to pay for their security deposit in three monthly installments or get LeaseGuarantee which covers a landlord’s rental losses. There are more cities considering this type of legislation. Here’s what landlords should know.
What is a security deposit alternative?
A security deposit alternative, like LeaseGuarantee, is typically a low cost policy on a lease agreement that can be purchased in addition to or instead of a security deposit. Landlords with a security deposit alternative can file a claim in the case of a rental loss such as nonpayment of rent, legal fees, or damages.
Rather than pay a security deposit of one or two months of rent, tenants pay a non-refundable fee annually or monthly for the LeaseGuarantee which comes out to a fraction of a normal security deposit. For example, LeaseGuarantee offered through AAOA starts at only $199/yr.
How does this affect landlords?
So far legislation in Atlanta and Cincinnati requires landlords offer a security deposit alternative or the option to split the security deposit into installments. Similar pieces of legislation are being reviewed in almost a dozen other cities and states and are likely to pass in the coming year.
Regardless of whether legislation has been passed in your city, it is worth considering offering the option of a security deposit alternative because it can provide more protection than a security deposit. LeaseGuarantee for example offers coverage up to $10,000 for lost rent or damages.
How does this affect tenants?
Tenants can choose if they would rather pay a traditional security deposit in hopes of getting it refunded fully in the future or they can pay a much lower non-refundable security deposit alternative. Tenants facing economic uncertainty or recovering from a financial hardship may prefer to keep the money they would have otherwise used for a security deposit in their savings account or to cover moving costs.
Why are more cities considering or implementing this type of legislation?
Even before the pandemic, major cities were concerned about the lack of affordable housing options. With the pandemic’s effects being felt by many unemployed residents, cities are looking at ways to reduce barriers to housing. A security deposit can be thousands of dollars, an amount that is unaffordable for many renters and is often a source of conflict between landlords and tenants. By implementing a security deposit alternative option, landlords still get the same (or more) protection of a traditional security deposit, but tenants do not have to pay as much to get the housing they need.
How can I get LeaseGuarantee?
Order a Red, White, Blue, or Gold screening package which provides the option to get LeaseGuarantee or get your applicant approved for free at GetLeaseGuarantee.com. Then invite your tenant to purchase or you can purchase LeaseGuarantee for the coverage amount you need. You can read more about LeaseGuarantee here or give us a call to see if it’s right for you (866) 579-2262.