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California bill aims to cap security deposits on rentals

On Behalf of | Jun 5, 2023 | Landlord/Tenant Concerns |

California’s chronic housing shortage has been a point of contention for years. Lawmakers are attempting to address the issue with a bill that would cap security deposits on rentals to one month’s rent.

How might this proposed legislation impact landlords and tenants in the state?

Proposed legislation

Under current law, California landlords may charge up to two months’ rent as a security deposit for an unfurnished rental and up to three months’ rent for a furnished rental plus the first month’s rent to secure a rental property. If Assembly Bill 12 becomes law, landlords in the state must charge no more than one month’s rent as a security deposit.

Potential impacts of the bill

Advocates for the bill say that the change would ease the housing crisis by making more rental properties affordable to tenants. Opponents say the legislation is unfair to landlords because one month’s rent may not be enough to cover potential losses due to tenants who damage rental properties or do not pay their rent.

Additionally, opponents argue that the change would disproportionally impact smaller landlords and affordable housing because the lower rents and smaller profit margins make limiting the security deposit to one month’s rent riskier for these property owners.

While no one solution is likely to solve the California housing crisis, lawmakers are facing intense pressure to do something. In addition to the security deposit cap, policymakers are considering steps such as lowering the cap on how much landlords can increase rental rates and adding housing as a human right to the state Constitution. These potential changes leave many landlords feeling nervous about their investments.