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The Biden administration’s top housing official wants landlords to get rid of “duplicative, excessive and undisclosed” fees and be more fair and transparent when it comes to saddling renters with extra costs.
“These fees limit options for renters and strain household budgets, particularly for renters with low and modest incomes who already face high rental cost burdens,” Marcia Fudge, the secretary of the Department of Housing and Urban Development, said in an open letter to the housing industry made public Wednesday.
Renters may be familiar with paying additional costs on top of their rent, including “pet rent,” trash fees, amenity fees and more. But with rental prices up substantially since the start of the pandemic and a record share of tenants spending more than 30% of their income on housing, there’s a growing desire to curtail extra costs.
Now lawmakers in Idaho are considering a bill that would keep rental fees “reasonable,” a Colorado legislator wants to ban pet deposits and pet rent, and a bill in Rhode Island would prohibit rental-application fees.
“Even after renters secure housing, their monthly cost may exceed the listed price of the unit due to hidden and unnecessary fees,” Fudge wrote. “These hidden fees may include move-in fees, late fees, high-risk fees or security bonds, convenience fees for online payments, and others.”
The Biden administration has already sought to tackle a variety of so-called junk fees, or surprise charges consumers face when attempting to purchase a ticket, book a hotel stay, pay a bill late, or terminate a service early, among other transactions. In fact, the announcement of Fudge’s letter came the same day the White House convened state and federal officials to discuss ways to address junk costs.
In her letter, Fudge noted that application fees might disproportionately burden renters of color — while the money used to cover tenant-screening reports may pay for inaccurate or unnecessary information that blocks the tenant from securing the apartment anyway.
“If prospective renters are not given the opportunity to review and correct the information in these reports, then these renters may end up paying numerous application fees only to be repeatedly rejected for this inaccurate information in their tenant-screening reports,” Fudge said.
Relatedly, nearly 100 commenters have responded to an effort from the Consumer Financial Protection Bureau and Federal Trade Commission to better understand how tenant background checks and renter applications — which also often come at a cost to consumers — impact the rental market. One recent comment, for example, came from an individual who described themself as a working millennial who, alongside their elderly parents, became homeless after their landlord decided to remodel.
For the past 30-plus days, the commenter said, their family has struggled to find a place to live that will accept their emotional-support animals — and they’ve “given up looking at properties and paying the application fees just to be denied.”
“I’ve walked away from places because they charge a real-estate fee on top of their rental that they couldn’t explain,” the commenter said.
Still, property managers and landlords have chimed in with comments of their own to defend fees and background checks. And Nicole Upano, the assistant vice president of housing policy and regulatory affairs at the National Apartment Association, said in a statement to MarketWatch Thursday that “rental-application fees are a necessary part of doing business, helping cover the costs associated with responsible screening.”
“It is paramount that housing providers retain the ability to screen prospective residents and ensure the long-term viability of rental communities,” Upano said.
Sharon Wilson Géno, the president of the National Multifamily Housing Council, said in a statement that while the group’s members are supportive of measures to better renters’ experiences, the industry is well-regulated as is.
“Secretary Fudge’s appeals regarding application fees and processes complement NMHC members’ continued commitment to resident-centered management practices,” Wilson Géno said. “NMHC is supportive of innovative and thoughtful approaches to streamlining application fees and screenings, but encourages federal policymakers to be mindful that the resident-housing provider relationship is already carefully regulated and overseen at local and state levels of government.”
Meanwhile, Fudge’s letter urged “housing providers, as well as state and local governments, to take action to limit and better disclose fees charged to renters in advance of and during tenancy.”
Positive policies, she added, may include eliminating rental-application fees outright, or at least ensuring they’re set at rates that only cover “actual and legitimate costs for services”; allowing a single application fee to cover multiple applications if they’re on the same platform or for the same housing provider or manager; getting rid of duplicative or undisclosed fees; and identifying in advertisements and lease documents the amount in fees tenants will pay both monthly and just to sign a lease.
“As HUD secretary, I will continue to look for other opportunities — engaging Congress, state and local leaders, and housing practitioners — to improve practices in the rental market, and I hope you will join me,” Fudge wrote.
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