A new California law scheduled to take effect next year caps security deposits at one month’s rent, according to reports.
Gov. Gavin Newsom has signed Assembly Bill 12 into law, which states that security deposits can’t be any larger than one month’s rent. The law is slated to take effect on July 1, 2024.
California became the 12th state to pass a bill that limits security deposit requirements.
Landlords could charge up to three months’ rent as a security deposit, plus the first month’s rent, due to an older California law.
In Los Angeles, where the average median rent is $2,895, a security deposit can cost nearly $9,000. In San Francisco, where the median rent is $3,495, deposits can cost more than $10,000.
Assembly Bill 12 was introduced by San Francisco Democratic Assemblymember Matt Haney and aimed to cap the cost of security deposits as part of a broader effort to make housing units more affordable statewide. “When renters can’t afford deposits, they often have to borrow from predatory lenders, go into debt, or just stay put,” Haney said in a statement.
“Landlords lose out on good tenants and tenants stay in apartments that are too crowded or have unsafe living conditions. Creating a rental deposit cap is a simple change that will have an enormous impact on housing affordability for families in California,” he said in the statement.
The California Apartment Association has opposed the bill and issued a statement following the bill signing.
Debra Carlton, executive vice president of state public affairs at CAA, wrote an opposition letter to Haney saying that the bill would limit “a property owner’s ability to financially cover property damage or unpaid rent is an unfair imposition for rental housing provider.”
