A provision in Virginia's SB349 reduces the maximum security deposit landlords can collect—and most property owners haven't heard about it yet.
Most Virginia landlords and property managers don't realize that a significant change to security deposit rules is coming through SB349, the Virginia Residential Landlord and Tenant Act. The buried provision cuts the maximum security deposit cap from two months' rent down to one month's rent—a direct reduction in the financial cushion available to cover tenant damage, unpaid rent, or other lease violations.
Under current Virginia law, landlords have been permitted to collect up to two months' rent as a security deposit. SB349 eliminates that flexibility. Going forward, the maximum allowable security deposit will be limited to one month's rent only.
For property owners, this is a material change to cash flow and risk management. A security deposit serves as a financial buffer—money held in trust to cover unpaid rent, repairs beyond normal wear and tear, or other tenant-caused losses. Cutting that buffer in half means less upfront capital available to address problems after a tenant vacates or defaults. For a landlord managing a $1,500-per-month rental, the difference is $1,500 in lost deposit capacity per unit.
This affects individual landlords, small-business property managers, and larger management firms equally. Any covered residential tenancy in Virginia will fall under the new one-month cap.
The provision applies to all residential landlord-tenant relationships in Virginia covered by the Virginia Residential Landlord and Tenant Act. That includes single-family rentals, multi-unit properties, and any other residential tenancies subject to state law.
Property owners should review their current lease agreements and deposit collection practices now. Existing tenancies with two-month deposits may not be immediately affected, depending on how the law is written and interpreted, but all new leases and renewals will operate under the one-month limit.
SB349 is scheduled for consideration during the 2026 General Assembly Session. The bill summary cites the security deposit change on Page 1, under the section addressing pre-tenancy fees and deposits. No specific effective date has been announced in available documents, meaning the exact implementation timeline remains unclear—but property owners should monitor the bill's progress.
Once enacted, the change will be law. Landlords will need to adjust underwriting, reserve policies, and lease templates to comply. Some property owners may need to recalibrate tenant screening or insurance strategies to offset the reduced deposit protection.
Track SB349 as it moves through the 2026 session. Review your current deposit practices and lease language. Consider whether reduced deposit capacity changes your tenant qualification standards, insurance needs, or reserve requirements. If you manage multiple properties or have significant exposure to tenant-related losses, consult with a property attorney or accountant about how this change affects your specific situation.
The Virginia Real Estate and Property Management Association and other industry groups are monitoring this bill. Additional guidance tailored to your business model and portfolio size will likely become available as the legislative session progresses.
Source: SB349 Bill Summary, Page 1, Virginia General Assembly.