Lawmakers are considering a bill that would allow landlords to charge tenants a monthly fee instead of a security deposit.
The bills, SB 884 by senator Jim Boyd and HB 537 by Rep. Jim Mooneywere started as a way to alleviate one aspect of the affordable housing crisis – move-in costs.
Tenants are generally expected to pay rent for the first and last months of a lease along with a security deposit. Florida law don’t set limits on how much landlords can charge for a security deposit, but many landlords charge an amount equal to one month’s rent. The cost may be higher for furnished apartments.
With rents rising rapidly across the state, signing a lease can be nearly as expensive as buying a used car — or it would be if those prices hadn’t risen as much across the board. pandemic economy.
In Tampa, for example, the average rent has exceeded $2,000, which means a new tenant could have to pay up to $6,000 on the day of signing. That’s $1,800 more than the same tenant would have paid in 2020, when the average was around $1,400. In West Palm Beach, where monthly rents are nearly $3,000it could cost $9,000 to move in.
Those who support the fee alternative say that if tenants could reduce that one-time hit, they could afford to sign a lease for the apartment they want. It also affects landlords, as the cost puts off people who would otherwise be ideal tenants. However, with rising property values and repair costs, it is often financially impossible to reduce or waive deposits.
Companies such as LeaseLock, which backs the proposal, sell a financial product that allows landlords to charge their tenants a monthly fee instead of collecting a security deposit. LeaseLock’s service is already available in many apartment complexes in Florida.
“A lot of people who can afford the rent are being priced out of new rental housing by the upfront costs,” he said. John Potier, a LeaseLock advisor. “Paying a small monthly fee instead of a large upfront deposit will help them move to a newer, nicer place faster – and do so liberally.”
But affordable housing advocates have derided the fee alternative as anti-consumer, noting that unlike security deposits, it is non-refundable and would not be used to offset property damage. The South Florida Sun-Sentinel also recently characterized fees as an “unregulated insurance product”.
The monthly fees are indeed non-refundable, but the fee amounts are cheaper than the security deposits by orders of magnitude. According to LeaseLock, the average rent for the properties it covers is $1,520 per month. The monthly fee for a property at this price is $25 or $300 over a 12 month lease.
It is also true that charges are not used to offset the tenant’s liability to pay for damages. However, tenants are not obligated to pay fees for their entire lease. They have the option, which would be guaranteed under Boyd and Mooney’s legislation, to provide a security deposit at any time, after which the charge will be removed from their monthly bill.
In this regard, it is a bit like the fees charged by Internet service providers for renting a modem. Account holders don’t get the fee back if they buy their own, and if they break the business unit, they have to pay to replace it.
“SB 884 allows tenants and landlords to enter into an OPTIONAL agreement to pay a fee instead of the traditional security deposit. For many Floridians, paying the first and last month’s rent, plus a security deposit, is too expensive. This bill states that these fees are OPTIONAL and the tenant may choose to pay the traditional security deposit at any time,” Boyd said in a statement to Florida Politics, emphasizing his own.
The Sun-Sentinel’s criticisms, in particular, rest on shaky ground. The LeaseLock service is a regulated insurance product. This is known in the insurance world as a “payer of last resort”, meaning it protects the owner from paying the repair bill if they are unable to collect from the tenant – the same function as a security deposit.
Monthly fees aren’t a panacea for Florida’s affordable housing crisis, nor will they offset the structural problems that underpin it, such as rising rents and low housing stock. Neither issue will be resolved as tenants prepare to sign their next lease.
Boyd’s bill has cleared two committees and is awaiting a hearing at the Rules Committee, which is its final stop. Mooney’s bill is ready for a floor vote.