Question about increase for a security deposit

[Freeman Schultz]

I have been looking at investment properties and learning a lot about investing but I am a little confused about who pays for the increases in the safety deposit.

In a lease renewal, the rent will usually increase and so will the security deposit. But does the tenant pay for the increase in the security deposit?

For example, in New Jersey under N.J.S.A. 46:8-19 a landlord is required to place security deposits in bank accounts that pay at least the regular rate of interest. What I have heard is that the interest earned on the security deposit belongs to the tenant, and must be paid out in cash every year or subtracted from the amount of rent owed on each renewal of the lease. Can the landlord take the interest due and put it toward the security deposit increase?

[Patrick Liska]

I would like to hear others opinions on that, to me, you collected the security deposit when they first signed. Now the tenants are renting another year, you have increased the rent they pay, and now want to collect more towards the security deposit to cover their rent increase. sounds to me like a good way to get your tenants mad at you, i think you should be happy they are renting from you after the increase. I do not usually handle that, my PM takes care of rent and collecting, i will ask what they do in that situation. but to me that's a nominal amount to being able to keep the tenant there and not having the place vacant. Do other Landlords out there collect more security deposit if they increase the rent ?