POLICY PROPOSALS

Vermont Housing Security Fund

The high cost of security deposits and housing providers’ reticence to take a chance on housing consumers with imperfect financial, criminal, or rental histories are the biggest impediment to housing for many Vermonters. 

However, I believe that it is possible to remove these barriers in a win-win way.

This proposal for a “Housing Security Fund” leverages Vermont’s nationally-recognized captive insurance industry. 

Currently, security deposits are held in individual small bank accounts all over the state, accruing virtually no interest and providing no benefit to the public at all. However, if all these security deposits, plus a modest fee imposed on housing providers, were pooled and invested using a captive insurance policy administered by the State or a non-profit entity, they could have a powerful positive impact. 

Housing consumers would pay their security deposit into the fund in manageable installments over the course of a year. At the end of a tenancy, security deposits would be fully refundable to the housing consumer if there is no willful damage or non-payment.

Payouts from the fund could be used to:

• Generate sustainable revenue for eviction avoidance programs for housing consumers facing financial hardship (such programs are currently funded by one-time appropriations).

• Insure housing consumers against accidental damage, which currently is deducted from security deposits; and

• Insure landlords against malicious damage not covered by typical insurance policies, and cover unpaid rent.

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