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City sets security deposit changes in motion

The New York City Department of Housing Preservation and Development (HPD) and the New York City Housing Development Corporation (HDC) today issued a Request for Expressions of Interest (RFEI) aimed at providing renters more choices for paying their security deposits.

As the City considers incorporating more security deposit payment options, the Security Deposit Alternatives RFEI is the first step in identifying eligible companies that can offer alternatives to traditional, lump-sum deposits for affordable housing applicants of newly constructed homes. 

The RFEI is the latest in the City’s efforts to make it easier for New Yorkers to access affordable housing and fulfills Mayor de Blasio’s State of the City 2020 commitment to put money that used to go to security deposits back in the pockets of hardworking New Yorkers by creating options for how renters pay security deposits, starting with City financed homes. 

“Many New Yorkers are living paycheck to paycheck making it difficult to afford the high upfront costs that come with moving into a new home. This administration is committed to creating better options for renters who might have trouble paying a security deposit all at once, and we’re looking for the right partners to join us in this important goal,” said HPD Commissioner Louise Carroll.

LOUISE CAROLL

“I applaud the Mayor for his vision to create a city that all New Yorkers can afford. This is another major step toward that goal.”

“Security deposits create barriers to mobility for too many New Yorkers. Providing alternatives to these burdensome requirements is an important step towards creating a fairer and more equitable city,” added HDC President Eric Enderlin. “We look forward to advancing this initiative to make it easier to obtain a safe, secure, and affordable home.”

Security deposit alternatives are financial products that allow renters to pay a portion of their security deposit value instead of the full amount at the time of lease-up. A traditional lump-sum security deposit can present a barrier for low-income and middle-income households. The requirement can prevent tenants from relocating to new housing when they need it. 

HPD and HDC will determine if the products and services being offered can meet the needs of the City’s development partners and tenants and consider select providers for a pre-qualified list that developers may consider for doing business.

Under the RFEI, providers cannot charge more than one month’s rent over a renter’s tenancy. They must also allow renters to pay a small portion of the security deposit upfront or the full amount over time while insuring owners against property damage claims or unpaid rent, among other requirements. 

“Policymakers must work with just as much urgency to respond to the economic challenge.  The purpose of security deposits is to ensure that apartments are livable, but it is time to reimagine this so that everyone benefits,” said Council Member Robert E. Cornegy, Jr.

 “Security deposits help landlords avoid damage to their properties, which ultimately should help tenants as well by keeping building maintenance expenses down. For many renters, security deposits only seem like an arbitrary extra fee. So I am very encouraged that HPD and HDC are working to find new solutions to keeping apartments habitable, which will help keep our communities whole.”

To be considered for the initial pre-qualified list, companies should send their responses in a single PDF to securitydeposits@hpd.nyc.gov by February 15, 2021. More information about the RFEI can be found on HPD’s website.  

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