This OpEd was published in the Queens Daily Eagle on August 17th, 2022. Photo by Nelson Mejia Jr./Flickr
Renting an apartment anywhere in New York can be expensive. And now, when consumers are experiencing sticker shock almost everywhere – from the gas pump to the grocery store – the housing sector is no different. Rent has see-sawed the last few years – the COVID pandemics’ impacts initiated falling prices, followed by rising ones as the economy rebounded.
In Queens alone, median rental prices reached $2,973 this month, up about $300 over the last year. Despite market conditions and macroeconomic factors, signing a lease for an apartment needs to be less burdensome, especially for the economically stressed. Fortunately, there’s a solution that helps both renters and property owners by alleviating some of the costs of moving into a new home — security deposit insurance.
A common obstacle to renters, whether new renters or those changing apartments, is the extra money required for a security deposit, usually an additional one month’s rent. This added expense makes moving into a new apartment both costly and difficult, especially in expensive markets like ours where a security deposit can easily exceed thousands of dollars. Currently, 40% of Americans do not even have enough extra money to afford a $400 emergency expense. If four in 10 Americans can’t cover a $400 expense, it is our obligation – as industry and market leaders – to find creative solutions to remove this obstacle.
One solution that’s already working in New York is taking greater advantage of affordable security deposit insurance that makes renting simpler and more efficient for all involved. Security deposit insurance allows renters to make small monthly payments instead of a traditional onetime payment at move in. Providing consumers with this choice offers a safe, effective, market-based solution to housing accessibility in our city. Security deposit insurance provides relief to renters who otherwise may not be able to live in Queens or who don’t want to tie up so much of their money in an inaccessible deposit.
It’s not just renters who benefit. Security deposit insurance provides protections to property owners too. Unlike the traditional cash deposit, property owners wouldn’t have to hold security deposit insurance in escrow with the increased liability risk and insurance costs. But they would still maintain protection from damages and unpaid rent. Renters and property owners are often at odds over issues concerning housing – a needless and artificial divide that serves those who benefit from the perpetual fight — but this is an issue where there is undoubtedly common ground and aligned interests. Security deposit insurance lowers the barriers to accessing affordable, quality housing, and helps ensure that Queens property owners maintain access to a stable pool of renters.
That is why the Rent Stabilization Association (RSA) and Rhino partnered years ago to increase awareness among property owners of this option. It is a win-win for everybody, and allows our city to keep growing. RSA and Rhino are committed to keeping New York City an attractive and affordable place to live. We strongly believe that making this option available to more renters could do a great deal to save both renters and property owners time and money while helping thousands of people access new housing. At the outset of the COVID pandemic, RSA and Rhino were in constant contact, helping lead the discussion that unlocked millions of dollars in security deposits to address immediate rent needs.
Over the last few years, security deposit insurance has been used in rental agreements in more than 2 million units across the country, saving renters upwards of $800 million. In New York City alone, Rhino security deposit insurance policies are offered in hundreds of thousands of units citywide with thousands in Queens alone.
This is especially important now, as pandemic-related economic stress continues and inflation eats up more of people’s paychecks. Some renters who would be model tenants can’t get into the rental market because they can’t pull together a security deposit. That barrier existed before COVID, but it’s even more acute now. If security deposit insurance were available to a larger section of Queens and greater New York City’s rental market, it can be a big step towards reducing our housing crisis.
Paraag Sarva is the co-founder and CEO of Rhino, and Joe Strasburg is the President of RSA.