Sun, Oct 13, 2019 - Page 16 News List

One firm’s simple idea to make rent more affordable: no deposit

By Oshrat Carmiel  /  Bloomberg

How do you make rental housing more affordable?

As policymakers in the US search for an answer — tinkering with proposals ranging from comprehensive rent control to rezoning — one start-up has put to work an idea that makes things cheaper immediately: eliminate the security deposit.

Entrepreneur Ankur Jain, 29, whose venture capital firm aims to alleviate the financial crunches saddling his generation, is the cofounder of Rhino, a company that allows renters to pay as little as US$2 a month for an insurance policy that can be used in lieu of a security deposit.

Landlords including Starwood Capital Group, UDR Inc and Moinian Group have already signed on to use the insurance, offering the option to tenants in major metros such as New York.

About 300,000 tenants are using a Rhino policy instead of a deposit in the US, Jain said.

The firm announced it is aiming for an even larger buy-in.

It released a nationwide policy proposal, directed at US legislators and presidential candidates, that would require landlords to offer such insurance, or allow deposit installment payments, as a way to offer relief from the upfront burdens of renting.

It would also mandate that security deposits be transferable, following a tenant who relocates from one rental property to another.

“You can save thousands of dollars in rent and you can unlock all this money back into the economy and everybody wins,” Jain said in an interview. “Landlords are still protected, tenants save money and the money is free to be spent on healthcare, student loans or anything else.”

The firm also announced last week that it raised US$21 million in Series A funding, from venture capital firm Lakestar, and Kairos, a venture company run by Jain.

The Moinian Group, which owns and manages 3,000 apartments in New York City, is also an investor in the insurance product, Moinian senior vice president Mitchell Moinian said.

The landlord offers the insurance at all of its rental properties, he said.

“These days, land prices, construction prices, rent regulations, taxes — all these things are so high that rent can’t really be drawn down to attract renters or make them more happy,” Moinian said. “It doesn’t happen. So we have to work with all other kinds of new applications.”

Offering deposit insurance “was a good way to make it more affordable for people wanting to live in our full-service luxury buildings,” Moinian said.

“Many markets have adapted to using alternative security deposits,” said Amy Groff, senior vice president of industry operations at the National Apartment Association. “This is a way to attract more prospective residents and makes it easier for them to move in, less money required.”

Like down payments on homes, security deposits are seen by landlords as an indication of financial health, so doing away with them could be a possible downside of an insurance alternative, even though landlords are financially protected, said Rick Haughey, vice president of industry technology initiatives at the National Multifamily Housing Council, a federal landlord advocacy group.

“It’s an indicator that you don’t have much of a buffer — but I don’t think a lot of people have much of a buffer,” Haughey said. “Even homeowners, I don’t think, can make a double mortgage payment every month. A lot of people live paycheck to paycheck.”

This story has been viewed 2260 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top