A Californian bill that has become law will limit how much landlords can charge for security deposits.
Governor Gavin Newsom signed Assembly Bill 12 into law in October, stating that security deposits can’t be more than one month’s rent, and the law will take effect on 1 July 2024.
Assembly Bill 12 was introduced by Democratic Assemblyman Matt Haney of San Francisco and aimed to cap the cost of security deposits as part of a broader effort to make housing more affordable statewide.
Under an older California law, landlords could charge up to three months’ rent as a security deposit, plus the first month’s rent.
In Los Angeles, where the average median rent is $2,895, a security deposit can cost nearly $9,000. In San Francisco, where the median rent is $3,495, deposits can cost more than $10,000.
With Newsom’s signature, California became the 12th state to pass legislation limiting security deposit requirements.
New York, Alabama and Hawaii are among a handful of states that have passed similar legislation.
“When tenants can’t afford security deposits, they often have to borrow from predatory lenders, go into debt or simply stay put,” Haney said in a statement.
“Landlords lose out on good tenants, and tenants stay in apartments that are too crowded or have unsafe living conditions. Creating a rent deposit cap is a simple change that will have a tremendous impact on housing affordability for families in California.”
When news of the bill broke, the California Apartment Association issued a statement reiterating its opposition to the proposal.
Debra Carlton, CAA’s executive vice president of state public affairs, wrote a letter of opposition to Haney, saying the bill would “limit a property owner’s ability to financially cover property damage or unpaid rent and is an unfair imposition on rental housing providers”.