New Yorkers paid over $507M for security deposits in 2016, report says
Photo via Creative Commons
In addition to having some of the highest rents in the country, New York City requires renters to provide a substantial chunk of money up front to cover an apartment’s security deposit. According to a new report by City Comptroller Scott Stringer, New Yorkers forked over more than $507 million for security deposits over the course of 2016. Stringer is calling for an overhaul of the city’s security deposit system, which he says has created a financial barrier that has intensified the city’s affordable housing crisis. “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,” Stringer said in a press release.
Currently, the system puts a greater burden on low-income New Yorkers: Moving to a new apartment could cost over 20 percent of a household’s yearly income, the report found. If tenants have a below average salary or bad credit, landlords will often require multiple months’ rent, deepening the financial burden.
Manhattan rentals had the highest security deposits, asking roughly over $216,000,000 from 99,462 households in new rentals. With about 92,000 households in new apartments, Brooklyn renters spent roughly $146,000,000 in 2016.
The report also found in 15 neighborhoods where the first month’s rent and security deposit cost renters between roughly 10 and 16 percent of their shared median income. The report found that many New Yorkers do not have the savings to cover the all-at-once sum. Just 46 percent of New Yorkers saved for an “unexpected expense or emergency” within the last year, the lowest rate among the country’s largest cities.
To overhaul the “insecure” deposit system, Stringer suggests capping security deposits at one month’s rent to “ensure that recent college graduates, immigrants, seniors, and lower-wage New Yorkers are not unduly punished and locked-out of the rental market.”
States like Alabama, North Dakota, Massachusetts, Hawaii and others have this system in place already. Since rent-regulated units in NYC have capped deposits, the proposal would just expand to all units.
Another recommendation aims to reduce upfront costs by allowing tenants to have the option of a payment plan, paying off the deposit in installments rather than all at once. Or, like some companies already offer, renters could pay a small one-time, or monthly fee in exchange for guaranteeing their security deposit.
In a statement, David Jones, CEO of the Community Service Society, applauded the comptroller’s recommendations. “The security deposit cap and other smart new ideas being put forward today by Comptroller Scott Stringer would help address one of the barriers preventing New Yorkers from finding a better place for their families to live.”
Read the full report from the comptroller here.