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Why a startup is taking on the inequity of security deposits

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By working with city governments to make onerous security deposits optional, Rhino wants to eliminate a barrier to affordable housing

An apartment complex facade.
A slate of new financial services want to eliminate security deposits, and offer tenants the ability to pay a small monthly fee instead, which they suggest will eliminate a barrier to housing for some low-income Americans.
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Tech companies have traditionally had an adversarial relationship with cities and city government (see Airbnb, Uber, Bird). But a new real estate-minded startup that aims to lower the financial barriers for renting an apartment not only wants to work with government, but help legislators pass laws it says will benefit low-income citizens.

Rhino, a New York-based startup co-founded in 2017 by Ankur Jain, a former vice president at Tinder, aims to eliminate the standard apartment security deposit by means of a nonrefundable monthly fee; renters pay a small amount to insure their unit and pays for any damages, roughly $13 a month for a $3,000-a-month apartment.

While the company has inked deals with some major Manhattan landlords, it’s run into a significant barrier to growth: In many cities, it’s not mandatory for landlords to accept this security deposit alternative.

To solve the problem, the startup has recently found success as an advocate in city halls across the country. After releasing a public policy proposal for a renter’s choice law that would allow Rhino and services like them to operate, many cities are considering the option.

In Cincinnati, city councilman P. G. Sittenfeld has just submitted a renter’s choice law to the council, which should be the subject of hearing on December 3. He believes it’s an example of how tech and government can and should collaborate.

“Who are the people and organizations in the private sector championing smart innovations, and how can that be married to smart progressive public policy?” says 35-year-old Sittenfeld.

If passed, the bill will be the first such law in the country, according to Sittenfeld. It already has the support of Cincinnati’s mayor, John Cranley, and tenant advocacy groups, including the Legal Aid Society of Greater Cincinnati.

Sittenfeld, who only heard of Rhino a few months ago, said his urgency in introducing the legislation reflects what he believes are its immediate benefits.

“To get an apartment in Cincinnati, you might need at least $1,000 extra for a security deposit, which is greater than many American’s life savings,” he says. “With this kind of insurance, someone can instead pay as little as $3 a month, removing a big barrier.”

Jain says that Rhino helps potential tenants by lowering the opportunity costs to get an apartment. Instead of paying a security deposit equal to a month’s rent—and in some cities, an additional month or two of rent—Rhino allows renters to pay a small monthly fee. By helping renters to avoid those payments, which typically sit in an escrow account and don’t earn interest, Rhino “unlocks” these funds and put them back into the economy, allowing consumers to pay back student loans, for instance, or create emergency savings.

Even better, Jain says, the benefits of this arrangement will disproportionately flow to the younger and lower-income segments of society the make up the majority of renters.

“You need to make sure everyone has access to this option, no matter who their landlord is,” Jain says. “And you need to work with the government to make the most difference.”

His initial analysis on the Cincinnati market, where rent averages roughly $1,000 a month, suggests between $100 and $150 million that would normally go into security deposits will instead stay with renters. Sittenfeld’s office estimated the amount would be roughly $70 million.

Some tenant’s rights groups and anti-poverty organizations have been skeptical of the approach advocated by services like Rhino. David R. Jones, the president of the Community Service Society, told the New York Times that “I am pretty wary when private institutions get involved in these types of things. There has to be a profit motive here.”

Sittenfeld says his proposed legislation has protections for tenants and landlords baked in; every insurance carrier operating this type of service will need to be certified by the Ohio Department of Insurance.