4 Reasons Landlords Require a High Security Deposit

A security deposit can make a difference in what apartment you’re able to afford. A high security deposit may be a barrier to moving into a unit, if you’re not able to negotiate a lower deposit. Some landlords require an amount that clearly violates the law, but fighting them in court over it won’t do you much good. If you’ve wondered why landlords require a high security deposit, here are four reasons why:

1 – Credit History

Some landlords base their security deposit decisions entirely on the prospective tenant’s credit history. They will look at your credit score, and if they decide it’s too low, they will  label you as “high risk.” Your penalty for being a high risk is to pay a higher security deposit than others who would rent the same apartment.

Other landlords take a closer look at the credit history to see whether you have a history of paying certain bills late. They won’t hold it as much against you if your score was lower because you were late in paying credit card balances or for closed credit card accounts. They will think you’re a risky tenant if the bills you paid late were utility bills.

2 – Business Capital

Landlords who own apartment buildings may charge a high security deposit simply as a means to capitalize their real estate investment business. It’s illegal and unethical to use security deposits in that way, but some do it anyway. Rather than put your money in an interest bearing account, they use the money to make repairs to the apartment you’re renting, advertise vacant apartments, evict other tenants and even pay themselves a salary.

If no one complains or pursues legal action, they get away with it and continue the practice until they’re caught.

3 – Keep Unwanted Tenants Out

Not everyone is going to be able to afford to pay a high security deposit. That’s why there is one. It’s a way to weed out unwanted applicants from the start. Some apartment communities prefer to have people that meet certain income thresholds, because the tenants in those apartments believe that their neighbors will be less problematic. That’s a false premise, but it’s a major unspoken selling point that some landlords use to attract the same types of tenants.

If you don’t want anything to do with that philosophy and if you sense that, find somewhere else to rent.

4 – Cleaning Fees

A landlord may add cleaning fees, making the security deposit higher than it would be otherwise. The reason that it’s so high is often because the landlord may price according to expensive cleaning services. It may not cost that much, if anything, when you move out, but it’s protection for them in case you leave the apartment dirty. By law, they are required to refund the portion of your deposit that is not applied to cleaning and repairs.

You have two options when you’re presented with a high security deposit: Don’t rent the apartment, or negotiate a lower deposit.