Assembly Bill 12 headed to the State Senate. The California bill limits the amount that landlords can charge for security deposits on rentals.
“In many cases, landlords across the state of California are asking for three times the monthly rent as a security deposit, and tenants frankly cannot afford to pay that,” said Assemblyman Greg Hart, District 37.
Those in favor of the bill say it’s a small step toward solving the urgent housing crisis across the state.
“There’s no one-size-fits-all solution to a complex problem like housing, but we’re trying in many ways to increase supply, increase housing affordability, and in this case, try to provide some protection for tenants so they can stay in their units, and if they do have to move, the security deposit won’t have too much of a financial impact,” Hart added.
Under current law, landlords are allowed to charge up to two months’ rent for a deposit and an amount equal to three months’ rent in the case of a furnished property. This is in addition to the first month’s rent.
But that would change with AB 12, reducing the deposit to one month’s rent.
“It gives the tenant some confidence to know that this is something they have to get together to move to another apartment,” Hart said.
“If you push someone into a corner, they will look for solutions and be creative. One of those solutions could be developing the rental market to make sure they protect their investment,” said Kirsten Kersten, general manager of McNamara Realty.
McNamara Realty provides management services to 99 clients and 300 properties in San Luis Obispo County.
“We see it from the customer’s point of view, but we can also see it from the owner’s point of view. I think it gives us a unique perspective because I see my clients call me very concerned about this and how they are going to protect their investment,” Kersten added.
She said the bill could affect some of her customers.
“I think it depends on the amount of rent you get for your property. I would say if you have a studio that you rent for $1,000 and you can only raise a $1,000 deposit, you’re likely to see more damage than you’re able to get,” Kersten explained.
California would not be the first state to limit security deposits. States like New York and Delaware already have something similar.
The California Apartment Association opposes the bill, saying in a statement: “The effects of AB 12 could be particularly difficult for small landlords and those who rent out single-family homes. These property owners must rely on a security deposit to cover potential damage or unpaid rent fee.”
