The Atlanta City Council on October 5 unanimously passed ordinance 20-O-1423, the “Renter’s Choice” bill. This ordinance provides renters with the option of paying security deposits in three installments or purchasing “rental security insurance” in lieu of paying a security deposit. Atlanta City Councilman Amir Farokhi said that the primary purpose of the legislation is simply to make it cheaper for people to access housing and to make housing more accessible for low-income tenants.
Security deposits can be a significant barrier for low-income families to find safe, decent, and affordable housing. Security deposits often equal to one or two months of rent, requiring families to have a significant amount of disposable income. This barrier has only been exacerbated by the coronavirus as many families have experienced a cut in wages or job loss. The idea of tackling the barrier of security deposits is gathering interest across the country. In April, the Cincinnati City Council and Virginia Governor Ralph Northam passed similar legislation to the Atlanta ordinance.
This type of legislation is not without critics. The Washington Post reported that various landlord associations were vocally opposed to similar legislation in Cincinnati, with a particular critique of rental security insurance as an alternative. Specifically, critics cited a renter’s inability to move to a month-to-month lease while using the rental security insurance and stated that the tenants would still be required to pay all claims made by the landlord after moving out. Nothing is covered. The product is not insurance at all; is a surety bond so the landlord feels okay renting without a deposit. Proponents say the rental security “insurance” monthly premium is so low (often $5-$15 per month) that it would take several years to match the cost of a typical security deposit, but in fact no “coverage” is provided.
“As the housing affordability crisis is exacerbated by the COVID-19 pandemic, cities must develop creative ways for low-income households to obtain housing.” said NLIHC state partner and executive director of Georgia Advancing Communities Together (Georgia ACT) Bambie Hayes-Brown. Hayes-Brown continued, “even those who can afford the monthly rent, the upfront costs of moving in (security and utility deposits and nonrefundable administrative fees) create significant barriers for low income renters to transition into stable housing and this is a step in the right direction.”
While the Renter’s Choice bill may help to reduce the barrier of security deposits, Atlanta still faces a large gap in the number of affordable housing units. NLIHC’s The Gap report estimates that the Atlanta Metropolitan Area faces a deficit of approximately 133,500 affordable units for households which make 50% or below the area median income. While the barrier of security deposits needs to be addressed, the shortage of affordable housing for the lowest income renters is also preventing them from finding safe, affordable, and accessible homes.