Major rental housing platforms and several states join the President’s effort to crack down on rental housing junk fees for consumers and increase transparency

July 19, 2023 - Today, President Biden is announcing a new front in his crackdown on junk fees: rental housing. From repeated rental application fees to surprise “convenience fees,” millions of families incur burdensome costs in the rental application process and throughout the duration of their lease. These fees are often more than the actual cost of providing the service, or are added onto rents to cover services that renters assume are included—or that they don’t even want.

Rental housing fees can be a serious burden on renters. Rental application fees can be up to $100 or more per application, and, importantly, they often exceed the actual cost of conducting the background and credit checks. Given that prospective renters often apply for multiple units over the course of their housing search, these application fees can add up to hundreds of dollars. Even after renters secure housing, they are often surprised to be charged mandatory fees on top of their rent, including “convenience fees” to pay rent online, fees for things like mail sorting and trash collection, and even so-called “January fees” charged for no clear reason at the beginning of a new calendar year. Hidden fees not only take money out of people’s pockets, they also make it more difficult to comparison shop. A prospective renter may choose one apartment over another thinking it is less expensive, only to learn that after fees and other add-ons the actual cost for their chosen apartment is much higher than they expected or can afford.

Today, the President will outline several new, concrete steps in the Administration’s effort to crack down on rental junk fees and lower costs for renters, including:

• New commitments from major rental housing platforms—Zillow, Apartments.com, and AffordableHousing.com—who have answered the President’s call for transparency and will provide consumers with total, upfront cost information on rental properties, which can be hundreds of dollars on top of the advertised rent;
• New research from the Department of Housing and Urban Development (HUD), which provides a blueprint for a nationwide effort to address rental housing junk fees; and
• Legislative action in states across the country—from Connecticut to California—who are joining the Administration in its effort to crack down on rental housing fees and protect consumers.

These announcements build on the President’s effort to tackle junk fees across industries. President Biden has repeatedly called on federal agencies, Congress, and private companies to take action to address junk fees across the economy, and ensure Americans are provided with honest, transparent pricing. These hidden fees increase the costs consumers pay: studies have found that consumers pay upward of 20 percent extra when the actual price of the product or service is not disclosed upfront. Providing consumers with the full price they can expect to pay creates competition among providers to lower costs, without relying on hidden fees. Earlier this year HUD Secretary Marcia Fudge released an open letter to housing providers and state and local governments to encourage them to adopt policies that promote greater fairness and transparency of fees specifically faced by renters.
Today’s actions include:

Commitments by rental housing platforms to show total costs up front. Each month, tens of millions of customers search online to find their next apartment or house. Today, major rental housing platforms are answering President Biden’s call for pricing transparency and announcing new steps to provide consumers with up-front information about fees in rental housing, building on recent actions by private sector leaders in other sectors, including airlines and event tickets. By providing the true costs of rent, people can make an informed decision about where to live and not be surprised by additional costs that push them over budget.

These companies are making the following announcements:

• Zillow is today launching a Cost of Renting Summary on its active apartment listings, empowering the 28 million unique monthly users on its rental platform with clear information on the cost of renting. This new tool will enable renters to easily find out the total cost of renting an apartment from the outset, including all monthly costs and one-time costs, like security deposits and application fees.
• Apartments.com is announcing that this year it will launch a new calculator on its platform that will help renters determine the all-in price of a desired unit. This will include all up-front costs as well as recurring monthly rents and fees. The Apartments.com Network currently lists almost 1.5 million active availabilities across more than 385,000 properties.
• AffordableHousing.com, the nation’s largest online platform dedicated solely to affordable housing, will require owners to disclose all refundable and non-refundable fees and charges upfront in their listings. It will launch a new “Trusted Owner” badge that protects renters from being charged junk fees by identifying owners who have a history of adhering to best practices, including commitment to reasonable fee limits, no junk fees, and full fee disclosure.

New research on policy innovation to address rental fees. Today, HUD is releasing a new research brief that provides an overview of the research on rental fees and highlights state, local, and private sector strategies to encourage transparency and fairness in the rental market, including capping or eliminating rental application fees; allowing prospective renters to provide their own screening reports; allowing a single application fee to cover multiple applications; and clearly identifying bottom-line amounts that tenants will pay for move-in and monthly rent. The brief provides a blueprint for how everyone from local government to landlords can do better for renters.

Recent state actions to address the hidden and unfair fees. In March, the White House convened hundreds of state legislative leaders, and released a resource entitled, “Guide for States: Cracking Down on Junk Fees to Lower Costs for Consumers.” Since the President drew attention to the pervasive issue of junk fees throughout the economy, a number of states have already gotten to work to crack down on rental housing fees, including:

• Colorado. Enacted House Bill 1099, which allows prospective renters to reuse a rental application for up to 30 days without paying additional fees; and House Bill 1095, which limits fees to tenants when landlords fail to provide a nonrenewal notice that disguise fees as “rent,” and limits the amount a landlord can mark up a tenant for third-party services.
• Rhode Island. Enacted House Bill 6087 to limit rental application fees beyond the actual cost of obtaining a background check or credit report, if the prospective tenant does not provide their own report.
• Minnesota. Enacted Senate File 2909, which includes a requirement for landlords to clearly display the total monthly payment and all nonoptional fees on the first page of the lease agreement and in all advertisements.
• Connecticut. Enacted Senate Bill 998 to prohibit a landlord from requiring a fee for processing, reviewing, or accepting a rental application, and set a cap of $50 on the amount that can be charged for tenant screening reports. The law also prohibits move-in and move-out fees, and certain fee-related lease provisions, including certain late fees related to utility payments.
• Maine. Enacted Legislative Document 691 to prohibit a landlord from charging a fee to submit a rental application that exceeds the actual cost of a background check, a credit check, or another screening process. The law also prohibits a landlord from charging more than one screening fee in any 12-month period. 
• Montana. Senate passed Senate Bill 320 to require landlords to refund application fees to unsuccessful rental applicants except any portion of the fee used to cover costs related to reviewing the application, including conducting a background check. Landlords may only charge candidates for the actual cost of obtaining a background check or credit report.
• California. Senate passed Senate Bill 611 to require the mandatory disclosure of monthly rent rates, including disclosure of a range of payments, fees, deposits, or charges, and to prohibit certain fees from being charged.

Earlier this year, the Consumer Financial Protection Bureau and the Federal Trade Commission, both independent agencies, requested information on tenant screening processes, including how landlords and property managers set application and screening fees, which will help inform enforcement and policy actions under each agency’s jurisdiction. The CFPB has noted that background checks too often include inaccurate or misleading information and risk scores that lack independent validation of their reliability.

Today’s announcements build on the Biden-Harris Administration’s ongoing efforts to support renters, including through the release of a first-of-its-kind Blueprint for a Renters Bill of Rights and a Housing Supply Action Plan, focused on boosting the supply of affordable housing—including rental housing. Reducing housing costs is central to Bidenomics, and recent data show that inflation in rental housing is abating. Moreover, experts predict that roughly 1 million new apartments will be built this year, increasing supply that will further increase affordability. The actions announced today will help renters understand these fees and the full price they can expect to pay, and create additional competition housing providers to reduce reliance on hidden fees.

In the coming months, the Biden-Harris Administration will work with Congress, state leaders, and the private sector to address rental junk fees and build a fairer rental housing market. On July 26, the Senate Committee on Banking, Housing, and Urban Affairs will host its first-ever hearing on junk fees, including in the rental housing market.
Source: Office of the White House