A new law in Atlanta could make it easier for tenants living in apartment complexes to pay their security deposits.
Dubbed the “renter’s choice” ordinance, the measure allows residents the choice of paying their security deposit in three monthly installments or through third-party rental security insurance. Traditionally, renters are required to pay the security deposit in full when they sign their lease, and that will still be an option.
Atlanta is just the second city in the country after Cincinnati to pass this kind of law, according to Councilman Amir Farokhi, who sponsored the new rule.
Security deposits — which often cost the equivalent of one month’s rent — are seen as a barrier for some people to find stable housing, especially if they are living paycheck to paycheck and unable to drop hundreds on an up-front deposit. In Atlanta, the average monthly rent is over $1,450, according to RentCafé, a property listing service.
According to a Zillow study last year, 35% of tenants said saving for rental costs like application fees and security deposits is a challenge.
“This was one small thing we could do to make it less costly to get into an apartment,” Farokhi said. “At no risk to anyone.”
In crafting the legislation, Farokhi said, he included input from the Atlanta Apartment Association, which is OK with the measure because landlords are still awarded protections. Under rental deposit insurance, tenants pay a monthly premium to an outside insurance carrier, which would then pay the landlord in case of a loss.
There are some caveats to Atlanta’s new law: It only applies to landlords who rent out more than 10 units and require a security deposit that’s more than 60% of the monthly rent.
Right now, the ordinance has no penalties for landlords who do not allow their tenants to pay their security deposits through the alternate methods. But if that becomes an problem, the council may amend the ordinance, Farokhi said.
“If we need to go back to put more teeth into it, we can always do that,” he said.
City Attorney Nina Hickson said during a council committee meeting that the law department would be prepared to defend the new ordinance against any potential legal challenges. The City Council unanimously passed the measure last week.