Red For Rent sign closeup against brick building
Getty
With millions of New Yorkers suddenly out of a job due to coronavirus, a number of city officials announced on Tuesday they are bringing forth a proposal that would allow renters to use their security deposits to pay April rent. This move joins dozens of other initiatives around the country to protect the estimated 43 million renters in the U.S. from losing their home due to the economic impact of coronavirus.
“In New York City alone, we’re talking about $8 billion that is currently inside our banks,” Brooklyn Borough President Eric Adams said during a teleconference. “We need that money in our community, we need it in our businesses, we need it as an infusion of cash in the city.”
The proposal includes the stipulation that renters will have to replace their deposits within 30 days, but also gives them the option to use one of the low-cost insurance programs in place of coming up with the deposit. Gale Brewer, Manhattan Borough President, said estimated it would help 2.5 million New Yorkers (which doesn’t include those living in rent controlled apartments since those don’t always require a deposit for tenants).
“Financially it is very efficient,” comments Omri Dor of the fintech company Obligo which provides deposit-free options to renters. “If Trump wants to send a $1,000 check to every family [the government] literally needs to come up with one thousand dollars and grow the deficit of the country, etcetera. But if you want to return a one thousand dollar deposit to a family, which is essentially the same effect, you don’t need to pay one thousand dollars. This is a far more efficient way to release a large amount of money to the public.”
The way deposit-free options work is similar to the damage clauses of hotel stays, but over the longterm. A renter agrees they will be charged if any damages occur during their tenancy in lieu of paying a deposit upfront. “All you need to do is promise to pay a future potential loss. Which is maybe fifty or a hundred dollars on average. And it’s in the future. So it’s fewer financial variables,” says Dor.
Dozens of states have implemented moratoriums on evictions, but that is just the beginning of ideas that are being proposed. State lawmakers in Maryland have called for additional protections, including one that would add on the requirement that landlords extend soon-to-expire leases by at least three months without penalty. Los Angeles has plans to start a rental assistance fund and, according to Supervisor Hilda Solis, tenants will have six months to pay back the lost rent. Emergency legislation in Washington D.C. forbids landlords from charging late fees on rent payments and creates a grant program for small business and self-employed residents. Many cities are also calling for city-wide rent freezes that would last at least a year in order to mitigate the expected longterm economic downturn.
Have you heard of any more ways to help renters? Let me know on Twitter @amyroseRE or email me [email protected] and I’ll add the ideas to the list.