Drew Wilson
Lawmakers are considering a bill that would offer tenants the option to pay a monthly fee instead of a security deposit.
The bills, SB 884 by Sen. Jim Boyd and HB 537 by Rep. Jim Mooney, have been floated as a way to alleviate one aspect of the affordable housing crisis — move-in costs.
Renters are typically expected to pay rent for the first and last months of a lease alongside a security deposit. Florida law does not 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 can 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 spiked as well in the pandemic economy.
In Tampa, for instance, the average rent has surged past $2,000, meaning a new lessee could have to pay as much as $6,000 on signing day. That is $1,800 more than the same renter would have paid in 2020 when the average was about $1,400. In West Palm Beach, where monthly rents are approaching $3,000, it could cost $9,000 to move in.
Those backing the fee alternative say that if renters could shave down that one-time hit, they could afford to sign a lease for the apartment they want. It affects landlords too, since the high up-front cost repels people who would otherwise be ideal tenants. However, with property values and repair costs on the rise, it’s often financially unfeasible to reduce or waive deposits.
Companies such as LeaseLock, which is supporting the proposal, sell insurance products that provides landlords the ability to charge their tenants a monthly fee instead of collecting a security deposit. LeaseLock’s service is available already in many Florida apartment complexes.
“Many people who can afford to pay the rent are priced out of new rental housing by upfront costs,” said Jon Potter, a LeaseLock adviser. “Paying a small monthly fee instead of a large upfront deposit will help them move into a newer place, nicer place faster — and do it in a free-market way.”
But affordable housing advocates have derided the fee alternative as anti-consumer, noting that unlike security deposits, it is nonrefundable and would not be used to offset property damage. The South Florida Sun-Sentinel also recently characterized the fee as an “unregulated insurance product.”
The optional monthly fee is indeed nonrefundable, but the fee amounts are less expensive than security deposits by orders of magnitude. According to LeaseLock, the average rent of the properties it covers is $1,500 a month. The monthly fee for a property at that price point is $25 — or $300 over the course of a 12-month lease.
It is also true that the fee isn’t used to offset a tenant’s responsibility to pay for damage. However, renters aren’t locked into paying the fee 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 fee will be removed from their monthly bill.
In that regard, it is somewhat similar to the fees internet service providers charge for renting a modem. Account holders do not get the rental fees back if they purchase their own modem, and if they break the company’s unit, they must pay to replace it.
“SB 884 allows tenants and landlords to enter into an OPTIONAL agreement to pay a fee in lieu of the traditional security deposit. For many Floridians, paying first and last month’s rent, as well as a security deposit, is too costly. This bill mandates that this fee is OPTIONAL and that the tenant may elect to pay the traditional security deposit at any time,” Boyd said in a statement to Florida Politics, with the emphasis his own.
The Sun-Sentinel’s criticism, in particular, sits on a shaky foundation. LeaseLock’s and other security deposit insurance products are “payers of last resort,” meaning they cover the landlord from footing the repair bill if the landlord is unable to collect from the tenant — the same function of a security deposit.
Monthly fees are not the panacea for Florida’s affordable housing crisis, nor will they counteract the structural problems underpinning it, such as rising rents and low housing inventory. Neither issue will be solved by the time renters are preparing to sign their next lease, but monthly fees instead of deposits could help renters get into more desirable housing.
Boyd’s bill has cleared two committees and is awaiting a hearing in the Rules Committee, which is its final stop. Mooney’s bill is ready for a floor vote.
