By Mark Zinman | Zona Law
We have repeatedly written about the increased scrutiny that the rental industry is facing. President Biden published a Blueprint for renter’s rights earlier this year, and Freddie Mac published a report analyzing resident rights throughout the 50 states. We speculated that the different issues they focused on were an indication of the types of policies that the Biden administration wishes to see changed.
It didn’t take long for more information to be published along these lines.
In March, Department of Housing and Urban Development Secretary Marcia Fudge published an open letter calling itemized fees and charges “junk fees” and called on operators as well as local governments to get rid of such fees.
It was written: “Many renters today face fees that are hidden, duplicative, or unnecessary as part of the housing search and leasing process. (…) President Biden has urged federal agencies to do everything they can to crack down on “junk fees” across the economy, from banking services to cable and internet bills to airline and concert tickets. Building on this critical initiative, today we are calling on housing providers and state and local governments to adopt policies that promote fairness and transparency of fees faced by renters.”
The letter first talks about application fees that residents are required to pay and states that background checks may not be accurate. It’s clear that the White House wants to change the application process and only charge tenants the actual cost of a background check and not profit from it, despite the administrative time and expense that goes into processing such matters.
Also, more importantly, HUD Secretary wrote:
“Even after renters secure housing, their monthly cost may exceed the listed price of the unit due to hidden and unnecessary fees. 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-Harris Administration’s Blueprint for a Renter Bill of Rights calls for clear and fair leases without hidden or illegal fees.”
It is clear the administration does not want owners to line-item charges that are not included in the base monthly rent and would prefer a flat monthly rate to be included in a lease. They also want such monthly charges to be better disclosed prior to the tenancy.
Here are the summary points they provided:
- Eliminate rental application fees or limit application fees to only those necessary to cover actual and legitimate costs for services;
- Allow a single application fee to cover multiple applications on the same platform or across multiple properties owned by one housing provider or managed by one company across providers;
- Eliminate duplicative, excessive, and undisclosed fees at all stages of the leasing process such as administrative fees and other processing fees in addition to rental application fees; and
- Clearly identify bottom-line amounts that tenants will pay for move-in and monthly rent in advertisements of rental property and in lease documents, including all recurring monthly costs and their purpose.
Remember that this Letter, like many things published by the White House, does not create law. However, it does indicate what policies the executive branch agencies will investigate and try to take action based on current federal law. There are no state laws on itemized charges, though it has previously been proposed and failed in the AZ legislature.