EXCLUSIVE Renter pay-hem
New Yorkers spend $500M on security deposits
New York City tenants spent a whopping $507 million on security deposits in 2016, according to a new report from Controller Scott Stringer — who said the pricey payments are another hurdle to finding affordable housing.
“Every day, New Yorkers are working harder and saving less — and right now, huge portions of their annual incomes are being held hostage in security deposits,” Stringer said in a statement. “These may just be considered the costs of being a renter in New York, but it’s not right and it’s not necessary.”
The amount held in security deposits was highest in Manhattan, where in 2016 99,462 people moved into new apartments with an average rent of $2,176 — resulting in $216,444,256 being paid out. The smallest amount of security deposits were held in Staten Island, where 7,544 people moved into new apartments with an average rent of $1,182, resulting in $8,915,461 being placed in security deposits.
Security deposits are typically collected by landlords to cover the costs of any potential damage at the end of the lease, and are often one month’s rent.
The median advertised rent for a city apartment is $2,695, according to the report — and that, doubled to include a security deposit of one months’ rent, amounts to 6% of the annual income of a typical family of four, just to move in to an apartment.
For struggling families in certain parts of the city where the median household income is lower than average, the percentage of their annual income that would be required to plunk down rent and a security deposits is even higher.
In Hunts Point in the Bronx, where the median household income is $23,131 and the average advertised rent $1,825, the upfront expense of a month’s rent and a security deposit would eat up 15.8% of the family’s annual income. The rate is 10% or higher in 15 communities in the city, the report found. It’s even more difficult to leave a lower income neighborhood for one with more opportunity — departing Hunts Point for an apartment with the city average rent and one months’ security deposit would eat up 24% of a Hunts Point family’s median income in one fell swoop, the report found.
And the deposits are sometimes more expensive — particularly for those tenants who can least afford it. Low-wage or low-credit tenants are often required to hand over multiple months’ rent, which sit in lowor no-interest bearing accounts during their tenancy, Stringer’s report says.
He’s calling for reforms to the collection of security deposits — including capping security deposit’s to one months’ rent for a year-long lease, something in place in other states and already the law for rent-regulated units in the city.
Stringer also proposed changing the mechanism for security deposits to avoid a tenant having to pay them up-front — which, coupled with their rent and moving expenses can make it hard for someone to find a home.
Tenants could be given the option to pay in installments, rather than all at once — an option they have in Seattle, where they can pay in six installments. Some companies offer insurance alternatives to security deposits, which allow people to pay smaller monthly fees to protect against damages, though they are not returned in the way a security deposit.
Stringer’s office also suggested cracking down on landlords who withhold security deposits unfairly when a tenant moves out — by creating a system where the money is held by a third-party rather than the landlord. If the landlord wants to withhold money for damage to the property or unpaid rent, disputes could be resolved by the third party at no cost to either side.
“Our proposals will change the rules of the housing market and put money back in the pockets of thousands of families looking for a bigger apartment in a better school district, to new graduates who have to find a place to live while paying down their student loans,” Stringer said. “For too long, the deck has been stacked against New York’s working-class renters but we’re taking a step forward to reimagine how the housing system works in our City.”