Security Deposit for Lease Renewal & Rent Increase
Hi,
I am a year old landlord. I am yet to send out a renewed lease to the tenants. Per market standards, I have notified tenants of the rent increase and they have agreed. Now, I am not sure how much am I allowed to receive as security deposit for the new lease. PA law states, I can charge SD of 2 months for first year and one month for subsequent years. Does that mean, I can charge the whole month of rent as SD for the new lease or just the difference from increased rent amount to the old? Please guide me through. Thanks for any help!
Typically you don't change the security deposit on an existing tenant.
If they have been there a year and been a good resident, that is a great sign. You shouldn't need more security deposit.
The only time changing a security deposit might make sense is if they are transferring from a lower-rent unit to a much higher-rent unit
I agree with Scott, you usually don't charge another security deposit when the tenant renews, although, you could increase the amount of the security deposit to match what their new increased rent will be; i.e. their rent is now $2000 and they have a sec dep of $2000. Now their new rent will be $2400, so ask for another $400 to put in escrow with their first deposit they paid.
I agree with the others. If they are good tenants, I bump the rent but not the deposit. If they stay for multiple years, then you may eventually decide to increase the deposit to make it closer to one month of rent.
Quote from @Meenoo Vana:Thanks for all the advice. Appreciate it.
Hi,
I am a year old landlord. I am yet to send out a renewed lease to the tenants. Per market standards, I have notified tenants of the rent increase and they have agreed. Now, I am not sure how much am I allowed to receive as security deposit for the new lease. PA law states, I can charge SD of 2 months for first year and one month for subsequent years. Does that mean, I can charge the whole month of rent as SD for the new lease or just the difference from increased rent amount to the old? Please guide me through. Thanks for any help!
#3 Managing Your Property Contributor
I've never charged an extra security deposit for a lease renewal. I collect it when they start their lease and leave it at that.
Quote from @Meenoo Vana:
Hi,
I am a year old landlord. I am yet to send out a renewed lease to the tenants. Per market standards, I have notified tenants of the rent increase and they have agreed. Now, I am not sure how much am I allowed to receive as security deposit for the new lease. PA law states, I can charge SD of 2 months for first year and one month for subsequent years. Does that mean, I can charge the whole month of rent as SD for the new lease or just the difference from increased rent amount to the old? Please guide me through. Thanks for any help!
Most security deposits will stay the same for rental increases. I never increased security held because I got an extra $25/m in rent : )
Quote from @Kim Meredith Hampton:This is great info as I was currently struggling with same question. Though I agree with the principle of just asking for additional $400 for rent change from $2000 to $2400, this is same as increasing the deposit from $2000 to $2400.... which is essentially in principle what you should want to accomplish. Great idea!!
I agree with Scott, you usually don't charge another security deposit when the tenant renews, although, you could increase the amount of the security deposit to match what their new increased rent will be; i.e. their rent is now $2000 and they have a sec dep of $2000. Now their new rent will be $2400, so ask for another $400 to put in escrow with their first deposit they paid.