For many housing advocates, sometimes silence is the best indicator of whether a law is working.
“I’ve heard no complaints, either from tenants or from landlords,” says Carlie Boos, executive director of the Affordable Housing Alliance of Central Ohio, a nonprofit advocacy group. “There hasn’t been any pushback; there hasn’t been any litigation.”
Boos is referring to a “Renter’s Choice” law in Columbus, Ohio, that passed in 2021. The law stipulates that landlords who have five or more units must offer tenants options for paying a security deposit: in full upon signing a rental agreement, over 3 monthly installments, or over 6 monthly installments. The law also requires landlords to present these options to tenants in writing.
[RELATED ARTICLE: Security Deposits Are a Barrier to Affordable Housing. What Can Be Done?]
Security deposits are most commonly paid to landlords as a lump-sum payment, and can range from one to three times the cost of a monthly rental price. This high upfront cost makes it difficult for renters—particularly low-income renters—to find housing they can afford, especially as rent prices continue to surge across the country.
In the past, Boos says, the one-month security deposit felt reasonable. But as rental costs increased, “it started to feel a little bit less reasonable, and then . . . it became two months’ [security deposit],” says Boos. “That’s what prompted early intervention, to say, ‘We need to be able to get ahead of this.’”
Interest in Renter’s Choice legislation was strong in 2020 and 2021, when officials in dozens of cities and states considered it to help renters offset costly upfront security deposits. But that interest has since died down. Why?
the renter’s insurance problem
Most legislation that fell under the Renter’s Choice umbrella included the option of so-called renter’s insurance, or security deposit insurance. With this product, a tenant pays on an ongoing monthly fee.
As Shelterforce reported in 2020, those products are not actually insurance; they’re surety bonds. That means the money a renter pays into the product will never be returned to them, unlike with a traditional security deposit. Tenants are also liable for any claims of damage or unpaid rent. The surety bond company pays out the landlord’s claims and then chases the tenant for the amount.
In 2020, Cincinnati became the first city in the country to pass a Renter’s Choice ordinance. The city’s law allows tenants to request an alternative to a traditional lump-sum security deposit. Landlords with more than 25 units are then required to offer the tenant one of three options: renter’s insurance, a six-month payment plan, or a lump-sum payment of no more than half of one month’s rent.
The more I do this work, the more I feel like it’s a competition to figure out who can stake as much of a claim as possible over a poor person’s life.”
Jyoshu Tsushima, Legal Aid of Southeast and Central Ohio’s Columbus office
The passage of the Cincinnati law was the first legislative win for Rhino, a surety bond company that offers a renter’s insurance product and lobbied for Renter’s Choice legislation across the country. The company claimed that offering the option would be a “win-win” for renters, who purportedly would save thousands on upfront move-in costs, and for landlords, who would be protected from non-payment of rent and damages.
But according to Eric Dunn of the National Housing Law Project, the intent behind this type of legislation wasn’t to provide tenants with accessible alternatives. “The goal is to facilitate the introduction of these bonds into the leasing process,” Dunn says.
In 2022, the National Housing Law Project released guidance on these security deposit replacement products, urging any legislation that mandates the option for these products to install the same protections and defenses against the company “as would have been available against a landlord” for wrongfully withholding a security deposit. “There should be no room in the marketplace for predatory products such as Rhino, which benefit only landlords while imposing all costs upon tenants,” the organization stated in its report.
“The more I do this work, the more I feel like it’s a competition to figure out who can stake as much of a claim as possible over a poor person’s life,” says Jyoshu Tsushima, managing attorney at Legal Aid of Southeast and Central Ohio’s Columbus office. “Your entire life is just owned through one contract or another. You don’t [even] have a security deposit anymore because someone else owns that as well.”
An earlier draft of the Columbus legislation did offer renter’s insurance as the sole alternative to a traditional security deposit. When then-City Councilmember Shayla Favor introduced the package of housing proposals during a public hearing in October 2020, she was joined by Jordan Stein, who was then-head of public policy at Rhino. Stein claimed that mandating the option to allow for Rhino’s product would put millions of dollars that were tied up in security deposits back into renters’ pockets and the Columbus economy.
But, after hearing public comment opposing the proposed legislation, including those citing negative online reviews of Rhino’s product, the city council ultimately chose a different route.
“We adopted what we thought was right for Columbus at the time,” says Boos. “It was something that was relatively common sense, and it’s been really well-received on both parties’ ends, including for the landlord.”
In 2021, the city of Baltimore also considered passing Renter’s Choice legislation that included a renter’s insurance option. But the city instead chose to offer income-eligible tenants a one-time grant to cover the cost of the security deposit.
where we are today
Since then, we haven’t seen much Renter’s Choice legislation. A website registered to Rhino that listed the alleged pros of passing such legislation and the public officials who support the movement was taken down at some point this year.
“Generally, local elected officials are looking to implement more permanent and robust protections over something like Renter’s Choice legislation, [which] can have limited impact especially when the legislation has extensive exemptions,” says Mia Loseff, the housing program coordinator at Local Progress, a network of progressive elected officials. “We’re seeing a lot of momentum around more comprehensive policies, such as rent stabilization and exploring social housing.”
Earlier this year, Rhino merged with its lead competitor, Jetty, into Rhino + Jetty. A Rhino chairman said in a press release that the merger is meant to “accelerate the company’s ability to grow the security deposit alternative market while expanding its suite of move-in solutions, including cash deposit management, renters insurance, guarantor coverage, and loss of employment insurance.”
Shelterforce reached out to the company to ask whether the new enterprise will continue its policy work on Renter’s Choice legislation, but the company did not respond to our inquiries.
While the interest in Renter’s Choice legislation has died down, legislators across the country are still pushing for alternative, non-predatory ways for renters to pay for security deposits.
This past June, the Philadelphia city council passed a law mandating that landlords who charge more than one month’s rent for a security deposit must allow a tenant to pay a portion of that deposit in three equal installments. This law applies to landlords who have at least three units.
While the laws in Columbus, Baltimore, and Philadelphia don’t ban the use of surety bond products, like the one offered by Rhino, they didn’t make it easier for the products to get to customers either, says Boos.
“Because our ordinance was well structured, it has reduced demand for that kind of programming,” says Boos. “We want to be cautious to say that anything is remedied entirely, but when you have fair, more predictable, non-predatory options, consumers are going to protect themselves.”
About the Author
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.