Coalition fights NH bill to double apartment rental deposits

Fosters.com

Kyle Stucker

A new bill seeks to double the maximum security deposit New Hampshire landlords can require before renters move into an apartment.

The legislation, House Bill 1485, comes at a time of intense rental housing demand on the Seacoast and in other parts of the state. Median rents for two-bedroom units exceed $1,200 a month on some Seacoast communities, while rental vacancy rates haven fallen below 1 percent. Some believe upping the up-front costs for the area’s increasingly limited affordable housing stock could cause more homelessness. The bill’s sponsors say it’ll do just the opposite.

“I actually see it as an advantage insofar as homelessness goes,” said Rep. Steve Beaudoin, R-Rochester, one of the bill’s co-sponsors and a landlord who owns rental properties in the Lilac City.

If the security deposit cushion was larger, Beaudoin said landlords could take more of a risk in helping out a tenant he normally “wouldn’t even consider” due to “sketchy” references or credit. HB1485, according to Beaudoin, “opens up a little bit of a possibility” that he could “come out almost whole” if he has to evict someone.

“I think it will help people that no landlord would consider renting to get their foot in the door,” he said, adding the lengthy eviction process often puts landlords in at least a one-month hole before its resolved. “People have bad past credit, but they’re working to resolve it. … It will get them in an apartment and maybe get them into a situation where they can get a good landlord reference.”

Rep. Keith Ammon, R-New Boston, is HB 1485?s primary sponsor. Five other state Republicans state representatives are co-sponsors: Beaudoin; Mark McLean of Manchester; Michael Sylvia of Belmont; Carol McGuire of Epsom; Richard Hinch of Merrimack. State Sen. Andy Sanborn, R-Bedford, also is a co-sponsor. The House Judiciary Committee will hold a hearing on the bill on Jan. 24 at 1:30 p.m. in room 208 of the Legislative Office Building in Concord.

State law currently prohibits landlords from charging more than one month’s rent as part of a security deposit. That’s on top of landlords’ ability to collect the first month’s rent at the start of a lease.

In 2015, House Republicans floated a similar bill, HB269, although that legislation had a key difference. The failed bill would have let landlords charge last month’s rent up front, in addition to first month’s rent and a security deposit. HB 269 could have forced renters to pay up to three months’ rent before moving in, with only one of those months being eligible to return to them at the end of the lease. Ammon’s HB1485 could also result in three months’ rent up front, but the two-month deposit would be eligible for return.

Ammon considers restrictions on security deposits a form of rent control that restricts the market and has a counter-intuitive effect on supply. He added that surrounding states have fewer rules for security deposits and 20 states have no restrictions at all.

He believes the bill will balance the rights of tenants with the rights of property owners and landlords. “Going from one-month security deposit to two months is common-sense legislation and not an extreme change,” he said. “It’s optional and not a mandate, so it’s leaving it up to the marketplace to decide what’s fair.”

In today’s rental market, some tenants with pets or with poor credit are high-risk for landlords because a pet can cause damage that exceeds one month’s security deposit, Ammon said. And a tenant with a history of poor credit could skip out on payments.

“Since landlords are unable to ask for additional security, it’s become common practice to ask for higher monthly rent, leading to a residual cost to tenants with pets or poor credit,” Ammon said. “They pay higher monthly rents in perpetuity, instead of being able to put up a one-time security deposit and saving the monthly increase. This overly complicates the tenant-landlord relationship and prices some renters out of the market.”

The New Hampshire Coalition to End Homelessness Director Cathy Kuhn said three months’ rent is an “enormous barrier” for renters and one she said will greatly inhibit social services from rehousing individuals who become homeless.

A variety of types of homelessness are on the rise on the Seacoast and in other parts of the state. While there are a number of intertwined factors that cause homelessness, officials believe skyrocketing rental housing demand is blocking prospective tenants with limited income and checkered histories.

“The result (of HB1485) might mean that length of stays in shelters will become longer, and as a result, fewer individuals/families facing an immediate housing crisis will have access to the limited shelter beds that are available,” Kuhn said in an email. “Due to the potential harmful repercussions that it has for homeless/low-income individuals/families, the NHCEH opposes this bill and will work with Housing Action New Hampshire and New Hampshire Legal Assistance to try to get it defeated.”

Samantha Doyon-Wentworth, 26, a Rochester native and single mother, said a security deposit totaling two months’ rent would be “outrageous.” She believes it would make it even more challenging for people like her to escape homelessness.

Doyon-Wentworth has struggled to find an apartment in the Tri-Cities for less than $900 a month. “There’s going to be more homeless” if the bill is passed, she said.

Doyon-Wentworth was featured in Homeless on the Seacoast, a special Seacoast Media Group report at seacoastonline.com/homeless. She had been living illegally in the office building, however since the publication of Homeless on the Seacoast the property owner has given her permission to be there.

Portsmouth Mayor Jack Blalock said requiring three months’ rent would “certainly” have an impact on the affordability of apartments in the high-demand Port City.

“I would hope that most property owners and property managers would be more interested in people who can pay rent on time rather than just restricting it to people who have a lot money in the bank,” he said.

Beaudoin, the Rochester state representative, doesn’t think that happens now and doesn’t think it will happen if HB 1485 passed. Beaudoin charges $600 a month for his one-bedroom units and $1,000 for his three-bedroom unit. He blamed the area’s high rents on the increasing cost of new construction, which he attributes to building materials and code requirements.

“Honestly, I don’t think a lot of landlords are going to (require two months’ rent in a security deposit) because it’s going to put the bar pretty high and I don’t think a lot of people will be able to meet it,” Beaudoin said. “Rentals are like any other business — if you price yourself out of the market, you’re not going to have any business.”

Former state Rep. Phyllis Woods, a Dover Republican, owns five local rental units and has been engaged in talks about affordable housing over the years. Like Beaudoin, she believes few landlords would request two months’ rent in a security deposit because of the market. However, she opposes the bill because it could potentially allow for abuse.

“No matter how pristine renters leave some apartments, some landlords seem intent to (retain) security deposits for normal wear and tear,” said Woods, who added she charges $1,000 a month for a “huge” two-bedroom apartment and “considerably less” for her other units. “That’s a blanket bill to cover sloppy background checks and a few abusive situations where landlords have other recourse. That’s a whole bad idea from many angles.”

Rather than placing “another nail in the entry door,” Rochester Welfare Director Todd Marsh said dialogue surrounding HB1485 should evolve into discussions about how cities and towns can make housing more accessible.

“I recognize rental management can be challenging and costly,” said Marsh, who is a member of the N.H. Local Welfare Association’s executive committee. “We need to be aware of the unintended negative social and economic consequences, including homelessness, housing displacement and the effects on continued economic vitality, as well as continue to maintain and add an adequate job force to continue job expansion.