Two thirds of the population of the city are renters
Cincinnati may do away with security deposits under a proposed bill and replace it with a requirement that landlords accept a security deposit insurance policy instead. The proposal could make Cincinnati the nation’s first locale to mandate a new option for renters to pay security deposits. Landlords and property owners aren’t fond of the proposed measure, but city officials believe the traditional security deposit format is in need of a serious revisiting. A security deposit in Cincinnati is typically the equivalent of single month’s rent. Lawmakers are citing what is a growing affordable housing crisis in the United States and maintain that the necessity to supply that a security deposit is a heavy burden to place on tenants.
The monthly rent for a typical one-bedroom apartment in Cincinnati was $850 in 2017. Two years later it’s risen to $1,300, with a 2-bedroom costing about $1,600 a month.
“This would keep money in the pockets of middle- and working-class Americans to be able to provide for their families,” – Cincinnati Mayor John Cranley
With security-deposit insurance, a tenant signs a policy with an insurer and pays a monthly premium. The policy guarantees an amount of money would be given to the landlord if there’s damage to an apartment. The premiums cost less than the average security deposit in the city, with the only drawback being that renters don’t receive the money back, with interest, after they leave an apartment.
Although the measure has garnered support from Cincinnati Mayor John Cranley, fellow council members and property owners are skeptical about the proposal. According to Inman, some landlords at the first recent public hearing on the law indicated that the plan could possibly remove the incentive to take care of the property. Another point tabled was that tenants’ credit could also be at risk if they fall behind on insurance payments. There were also questions about what would occur if a claim was denied by an insurance company.
A second hearing has been scheduled for December 31. Are you a property manager or landlord in Cincinnati? What do you think of this new law?