President Biden and the Department of Housing and Urban Development (HUD) have announced efforts to address junk fees in rental housing, which can increase costs burdens for renter households.
“Too often, renters are hit with unexpected fees on top of their rent,” said HUD secretary Marcia L. Fudge. “Today’s announcement shows the Biden-Harris administration’s commitment to lower costs for renters and build a fairer, more transparent rental housing marketplace.”
The administration has outlined several steps to crack down on these junk fees, which it noted can often exceed the actual cost of providing a service or are added on to cover costs that renters assume are included or that they do not want.
As part of the announcement, three of the nation’s largest online rental platforms—AffordableHousing.com, Apartments.com, and Zillow—will provide new tools to help renters determine the all-in price of a unit and be able to comparison shop for apartments. For example, Zillow will be launching a Cost of Renting Summary on its active apartment listings, and Apartments.com will unveil a calculator on its platform that will help renters determine the all-in price of a unit. The nation’s largest online platform for affordable housing, AffordableHousing.com will require owners to disclose all refundable and nonrefundable fees and charges upfront in their listings.
The announcement also highlighted several recent state actions to address the fees. The White House had convened hundreds of state legislative leaders in March, when it released the “Guide for States: Cracking Down on Junk Fees to Lower Costs for Consumers” resource. State efforts include:
- In California, the passed S.B. 611 requires mandatory disclosure of monthly rent rates, including the disclosure of a range of payments, fees, deposits, or charges;
- Colorado enacted H.B. 1099, which allows prospective renters to reuse a rental application for up to 30 days without paying additional fees, and H.B. 1095, which limits added fees or unfair provisions;
- Connecticut enacted S.B. 998, which prohibits a landlord from requiring a fee for processing, reviewing, or accepting a rental application and sets a cap of $50 for tenant screening reports;
- Maine enacted Legislative Document 691 to prohibit a landlord from charging a fee to submit a rental application that exceeds the cost of a background or credit check or another screening process. It also prohibits charging more than one screening fee in a 12-month period;
- Minnesota enacted Senate File 2909, which includes a requirement for landlords to display the total monthly payment and nonoptional fees on the first page of a lease agreement and in all advertising;
- Montana passed S.B. 320 to require landlords to refund application fees to unsuccessful application, excluding the costs related to reviewing the application and conducting a background check; and
- Rhode Island enacted H.B. 6087, which limits rental application fees beyond the cost of obtaining a background check or credit report, if the prospective resident doesn’t provide their own.
In addition, HUD’s Office of Policy Development and Research issued a brief that highlights local, state, and private-sector strategies to encourage fairness and transparency in the rental market that include actions around excessive fees.
Apartment industry leaders applaud increased transparency in the cost of rental housing for both residents and the housing providers. However, they have reservations about today’s announcement on junk fees.
“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,” stated Bob Pinnegar, president and CEO of the National Apartment Association. “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.”
The National Multifamily Housing Council (NMHC) also issued a statement.
“While we support the voluntary initiatives included in the White House’s announcement today, we strongly disagree with the characterization that rental housing residents are pervasively being taken advantage of by housing providers. We are aware of no credible evidence to support this assumption,” explained the NMHC. “If there are bad actors who are taking advantage of prospective residents, they should be dealt with through appropriate legal channels. As the White House announcement highlights, the relationship between a housing provider and a resident is already largely and appropriately regulated at the state and local levels which can be more responsive to the unique needs of local communities and their housing markets.”
The NMHC is calling for the White House, as well as other lawmakers on both sides of the aisle and at all levels of government, to put their focus on enacting policies such as the administration’s Housing Supply Action Plan that was released last year and outlined a number of actionable steps to lowering housing costs. It also encourages leaders to enact proven approaches that create more housing supply rather than promoting additional regulatory proposals that make it more difficult to build and operate rental housing, which can drive up renters’ costs.