The Biden administration announced an additional front — rental housing — for its standing opposition to so-called junk fees for consumers.
“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,” the White House posted. “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.”
The broader focus on junk fees is far from a new surprise. It goes back to at least August 2023 when, during a state dinner, Biden said, “These so called ‘junk fees’ are not just an irritant – they can weaken market competition, raise costs for consumers and businesses, and hit the most vulnerable Americans the hardest.”
As part of this, in October 2022, the Consumer Financial Protection Bureau issued guidance about “likely unfair and unlawful” surprise overdraft fees levied when consumers had enough money to cover a debit charge when a bank authorized it. The CFPB also proposed a rule in February to reduce credit card fees.
The Federal Trade Commission looked at a rulemaking process to crack down on junk fees in many contexts.
In this year’s State of the Union Address, Biden called on Congress to pass a Junk Fee Prevention Act.
In this latest attempt with a focus on rental housing, some of the fees the White House mentioned were application fees that exceed the cost of performing background and credit checks. “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.” Another negative aspect of hidden fees is that they make comparison shopping more difficult to do.
The White House announced commitments from Zillow, Apartments.com, and AffordableHousing.com to provide total upfront cost on rental properties.
Meanwhile, the Department of Housing and Urban Development (HUD) released some research on how to approach reducing rental junk fees. They would include capping or eliminating rental application fees; letting prospective renters provide their own screen reports; limit move-in or lease-signing fees; allow one application fee to cover multiple applications; and identify bottom-line amounts that tenants can be charged for move-in and lease-signing.
The apartment industry is not a fan of these suggestions. “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,” says Bob Pinnegar, the National Apartment Association’s CEO, in prepared remarks.
“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.”