There’s immediate relief for the housing affordability crisis
This past Thursday, Rhino shared what we believe legislation can do to provide an immediate solution to the housing affordability crisis.
Listen or read the full testimony below.
My name is Paraag Sarva and I’m the CEO and co-founder of Rhino. Our mission is to make renting more affordable and easy by replacing security deposits with low-cost insurance.
Our elected officials at the state level and members of this body have been hard at work to address obstacles to secure affordable housing faced by millions of New Yorkers. In New York City, renters are facing unprecedented financial challenges. Millennials under 35 have a median savings of just $1,500, while they are faced with an average rent price in NYC of $3,500 per month — and these prices continue to grow every year.
Upfront costs, mostly in the form of traditional security deposits, are the primary barrier to many looking for a home. The current model of paying traditional security deposits continues to lock up millions in hard-earned cash from everyday New Yorkers, a staggering $507 million in 2016 alone, according to a report released by Comptroller Scott Stringer last year. Security deposits make up as much as 50% of moving costs, with most of it locked away in escrow accounts earning nearly 0% interest. Steep security deposit costs prevent New Yorkers from upgrading their living situations, moving neighborhoods, and saving for the future.
While the proposal in the City Council would specifically cap broker’s fees and recent laws passed in Albany cap security deposits to one month’s rent, most New Yorkers already only pay one month’s rent as a security deposit — so the typical New Yorker wouldn’t see much of an impact from this proposal. People simply don’t have the savings to keep deposits locked up for no good reason when they have to pay off student debt or health bills, secure childcare, or invest for the future.
Technology and innovation are creating new opportunities to replace the old-way of doing business and reduce transaction costs. Specific to rental transactions, breakthroughs in insurance over the last three years have made it possible to replace the age-old cash security deposit, that are burdens for both renters and landlords, with affordable insurance programs. The insurance assumes the risk and guarantees the repair of damages or unpaid rent, coverage that is still essential for the landlord, while lifting the burden from renters upfront and allowing them to instead pay a low monthly premium.
To further help renters, the City Council should pass a bill that requires landlords to offer renters an insurance option instead of the cash security deposit to secure their homes.
There are already forward-thinking landlords who provide an alternative choice to the traditional security deposit. But as you know the housing affordability crisis is an urgent problem for New Yorkers, and we can’t wait idly for the entire real estate industry to catch up to this practice that has such significant benefits for those struggling to find a home today. We need legislation to provide an immediate solution to this problem.
We look forward to working together in the future to ensure that housing is affordable and accessible to all New Yorkers.