The Biden administration on Wednesday announced its latest effort to address “junk fees” people face when trying to rent an apartment. These costs, which often come as a surprise, include application fees, administrative fees, parking fees, and even pet fees.
“Folks are tired of being played for suckers,” President Biden said.
As part of the anti-junk fee campaign, several states issued new rules around these fees, and Zillow, the online real-estate marketplace, introduced a “cost of renting summary” that runs through all the fees a renter can expect to pay. The platform already showed extra prices and fees on listings, but the “cost of renting summary” is new, a spokesperson said. Apartments.com and AffordableHousing.com have also committed to making rental costs more transparent in the initial search.
“Several states issued new rules around rental junk fees, and Zillow introduced a ‘cost of renting summary’ for renters.”
Transparency surrounding these fees is not the same as removing them, rental housing advocates say. “We’re thrilled the Biden administration is talking about junk fees in the rental housing context,” said Ariel Nelson, a staff attorney with the National Consumer Law Center.
But the new measures announced by rental-listing sites also have their limitations. “Disclosures, standing alone, are kind of a weak form of protection for consumers. They don’t do anything to lessen or eliminate the fees,” Nelson added.
Rental junk fees include “hold fees: ahead of a move-in, “payment-processing fees” for monthly rent, “late fees” for those who are late on their rent, “insurance fees” and “high-risk fees” for certain tenants who may have a low credit score, a short or no rental history, or even a criminal record, according to a National Consumer Law Center report this year.
Several U.S. states help in the fight against rental junk fees
The White House also revealed a list of U.S. states that have recently enacted legislation to help either stamp out rental junk fees, or at least be more upfront about them. Those states include Colorado, Rhode Island, Minnesota, Connecticut, Maine, Montana and California.
Some states already have strict caps on application fees. In Virginia, the application fee is limited to $50. In Washington, any application fee has to equal the cost of a tenant screening. Meanwhile, Vermont and Massachusetts already prohibit rental-application fees. (But there are finder’s fees that brokers can charge in Massachusetts.)
Nelson said the action taken by states is, in some way, a double-edge sword. “We don’t want to see language legitimizing these tools that come with so many problems,” she said, referring to credit-score checks and tenant screening when people apply for rental housing.
“‘We don’t want to see language legitimizing these tools that come with so many problems.’”
Credit checks and wide-ranging tenant screening services can contain inaccuracies, Nelson said. Tenant-screening reports can unfairly reveal a person’s entanglements with the criminal justice system, including an arrest that resulted in a case being dismissed, she noted.
Nelson said landlords should be more concerned with whether the person is capable of paying rent now. “The rent eats first,” she said. “People pay rent before they buy food, before they buy medicine,” she said. “People will try to stay housed at all costs.”
What’s more, Black, Hispanic and Asian-American renters are much more likely to pay application fees than white renters, according to the U.S. Department of Housing and Urban Development. One theory: white Americans are more likely to own property in nearly every U.S. state, per this research from Harvard University’s Joint Center for Housing Studies.
Landlords and property managers see things differently
Another issue: landlords and property managers don’t regard these many fees as “junk fees.”
“Administrative services, screening and application processes and community amenities are a site-level decision that, when applicable, come with associated costs,” said Greg Brown, senior vice president for the National Apartment Association, a trade organization representing landlords and property managers.
Landlords have their own expenses to cover payroll, insurance and taxes, he said. “One-size-fits-all fee policies fail to acknowledge operational realities, and interfere with housing providers’ ability to invest in and maintain their apartment communities for their residents,” Brown said.
“Rental housing is a narrow-margin industry that exists to serve our renters and communities. Amenities and services come at a cost, which is communicated with residents in the lease and the leasing process,” said Bob Pinnegar, CEO and president of the National Apartment Association, a nonprofit association that represents apartment communities, owners and vendors.
“Though the industry supports increased transparency and has always called for dialogue between housing providers and their residents, policymakers must recognize operational realities and the role that fees play in housing viability,” Pinnegar added.
? A spokesperson for the company said the “cost of renting summary” is just the beginning. Prospective tenants and landlords, they said, will have to determine the final costs and pricing for themselves.