In California, landlords have the legal right to request renters to provide over $10,000 before handing over the keys to a new apartment. This is due to state laws that allow property owners to charge up to two months’ rent as a security deposit, in addition to the initial lease payment. For furnished units, deposits can even reach three months’ rent. However, a new bill, known as Assembly Bill 12, is currently making its way through Sacramento with the goal of ending these high charges. If passed, the bill would cap security deposits at one month’s rent for most apartments, condos, and single-family homes.
The proposed legislation has garnered significant support as it aims to alleviate the financial burden faced by California’s approximately 17 million renters, many of whom are already struggling to afford the state’s exorbitant rental prices. Matt Haney, the Democratic state assemblymember from San Francisco and the bill’s proponent, emphasized that high-security deposits force families into taking on debt or residing in overcrowded, inadequate, or unsafe housing situations. Haney, a member of the recently launched renters caucus in the Legislature, believes that this measure will provide much-needed relief to renters across the state.
Assembly Bill 12 aims to cap security deposits at one month’s rent, providing relief to millions of struggling renters in California
Assembly Bill 12 has already passed the state Assembly with overwhelming support and is currently under consideration by the Senate. While most Republican assembly members voted against the bill, arguing that it could worsen the housing shortage by discouraging landlords from renting out their properties, supporters assert that the measure is necessary. Rent prices have been on the rise after plummeting in many cities during the height of the pandemic when urban centers experienced mass exodus. Currently, the median cost of a two-bedroom apartment in the Bay Area ranges from over $2,500 in San Jose and San Francisco to around $1,750 in Oakland, according to Apartment List, a rental listing site.
According to academic researchers from the Bay Area Equity Atlas, almost half of all renters in the nine-county region spend over 30% of their income on housing costs, classifying them as “rent burdened” by federal standards. This underscores the urgency of addressing the affordability crisis.
The personal experiences of individuals further highlight the necessity of the bill. Michael Wonders, a retiree on a fixed income, expresses his concerns about being able to afford a security deposit higher than one month’s rent if he were to move again. His previous move was made possible by the money he received when his previous apartment was taken off the rental market. However, Wonders acknowledges that saving money in today’s economic climate is challenging.
Even with a full-time job, people can’t afford a security deposit
Haney was inspired to propose the bill after meeting a janitor in his district who worked two full-time jobs but couldn’t afford a deposit for a larger unit to accommodate his wife and two young children. The bill, supported by various labor and anti-poverty groups, does not alter how property owners can recover costs for damages or impose any restrictions on rent charges.
Opposing voices from landlords argue that current regulations on security deposits are already stringent enough. They contend that Haney’s bill could financially jeopardize many property owners if tenants cause damage or fail to pay rent. Derek Barnes, chief executive of the East Bay Rental Housing Association, argues that security deposits are often used to accommodate higher-risk applicants and small landlords who have already suffered losses due to prolonged eviction moratoriums.
In response, Haney asserts that a one-month security deposit should be sufficient to cover damages in most cases, considering the steep rental prices in the state. He also highlights that a dozen states across the nation, including politically diverse ones such as Alabama, Delaware, and New York, have already implemented similar laws.
While Haney remains open to potential changes, including exemptions for small landlords renting single-family homes, he is confident that the bill will pass with its core provisions intact. He emphasizes that while the need for more housing, especially affordable housing, is evident, reducing the burden of housing costs can be addressed promptly through this legislation.