Trending Security Deposit Flexibility and Renters Choice Legislation

Renters choice of housing is only as accessible as there is access to the costs associated with moving. Legislation is changing regarding security deposits from requiring payment options to allowing those deposits to be used towards rent.

Learn about these localized legislative changes. This eye-opener can poise landlords to be early adopters of these options before they become mainstream.

In This Article

Renter’s Plight

Based on one study in 2019, the Rental Housing Journal reported that half of renters weren’t able to afford a security deposit and rental housing deposit alternatives drive more leases.

Fast forward to 2020, the pandemic issued in the popularity (and necessity) to work from home for a portion of the population. For others, it created a serious need to search for new employment opportunities and more affordable housing. Coupled together, it is creating a tsunami of renters on the move for those that can afford the expense. 

Sadly, for many needing to make a move for those better opportunities they just can’t as most of their life savings are tied up in a security deposit at their current rental. The funds are trapped and for all intents and purposes, so are those renters.

Rental Housing Deposit Alternatives

In addition to coming up with the first month’s rent, traditional security deposit requirements ask prospective tenants to pay anywhere from one to three times the rent amount. Some are also asked for last month’s rent up front as well as other fees such as key and pet deposits.  

That bundle of money is difficult to come by in normal conditions but COVID has left many with difficulty making ends meet making saving for a move nearly impossible. 

Enter rental housing deposit alternatives to the rescue! Those alternatives include: 

– Deposit Payment Installment Plans
– Security Deposit Insurance
– Renter Flexibility
– Renters Choice 

Installment Payments for Move-In Costs

Sometimes a potential tenant just needs a little time to meet the financial move-in obligations. As they wait for their previous landlord to release their deposit back to them, an installment plan from the new landlord could help bridge that gap.

There are many different payment plan arrangements that could be devised such as: 

  • Divide the security deposit into 12 equal installments.
  • Break payments into bi-weekly installments.
  • Require half down and the remaining installments due within the first three months.
  • Divide the deposit into three equal installments.

Insurance for Security Deposits

Specialty insurance providers are sprouting up offering landlords the ability to offer the tenants the option to purchase a security deposit insurance policy. Just like a traditional security deposit, it covers physical damage, lost rent, and unpaid fees but not normal wear and tear. In lieu of the landlord holding funds to cover those expenses, they would submit an insurance claim after a failed attempt to recover from the tenant. 


  • Many policies cover multiple months of unpaid rent. 
  • Eliminates the need for landlords to hold deposit funds or deal with applying and paying out interest on those held funds when required. 


  • Long term renter could be paying much more in total premiums than the initial SD.
  • Each claim is evaluated at the time of loss to determine coverage and not necessarily guaranteed. 

Security Deposit Insurance Carriers
This curated list of security deposit insurance providers can help landlords and property managers start their research to see if this option makes sense for helping their potential tenants make the move. This list is in alphabetical order and is not an endorsement for any one provider. 


Renters Choice: Offering new tenants options to meet the security deposit obligation opens up housing choices for those unable to move due to financial restraints. 

Renters Choice Explained

Above we mentioned renters choice as an alternative to a traditional security deposit. What exactly is renter’s choice? Does this mean the renter gets to choose how to pay a deposit? 

Renter’s choice is a misnomer. The term means the landlord offers different security deposit payment options, which in turn allows the renter to now have more housing choices available to them. 

Landlord’s choice is also a confusing phrase. Many landlords made the choice independently to offer renters security deposit payment options. But in some areas, although the landlord may choose the options to offer, they are required to create options.

Cincinnati made a bold move towards equality in housing choice back in January 2020 as the first city in the nation to adopt renters choice legislationWithin that legislation, landlords choice is the term used to explain that a landlord now must offer new tenants choices for meeting the security deposit obligation:  

  • Pay the security deposit upfront or,
  • Require a security deposit insurance policy or,
  • Pay the deposit in installments. 

Seattle followed suit in to require landlords to offer security deposit installment plans. Those ordinances went into effect in June. 

Landlord’s Choice | Regulation or Option

Unlike Seattle and Cincinnati, although not required to offer a choice, Virginia regulations were amended in April and now state a landlord may permit a tenant to provide damage insurance coverage in lieu of the payment of a security deposit

Regulations are constantly updated to meet the current climate so it is of utmost importance to check your state and local laws and statutes to keep current and follow all regulations. 

NOLO offers some great information to help you keep current with those updates:

After researching, if there are no formal requirements, consider creating security deposit alternative payment options for your new tenants. 

Landlords may find that offering these alternatives may help fill vacancies faster while giving tenants the opportunity to move to a location and home that meets their needs and budget; a true win-win for all.