If you’ve ever rented what you thought was a great apartment at a reasonable price, only to be hit with an onslaught of unexpected fees that ended up stretching your budget (elevator fee—what’s that?!?), you know: so-called junk fees suck!
The White House agrees. On July 19, President Biden announced a new effort to crack down on “rental housing junk fees” that often come as an unexpected—and burdensome—surprise to renters. Dwellsy CEO and cofounder Jonas Bordo, who served as a subject matter expert to the Biden administration as it formulated its approach, isn’t surprised that junk fees are making waves. He has noticed a recent rise in hidden costs to renters, and he says they bring an additional level of challenge to the already-complicated rental search.
“The White House points out that everything from repeated application fees to excessive amounts of ‘convenience fees’ can make the total cost of an apartment much higher than renters expected or can even afford,” points out Bordo, coauthor, along with Hannah Hildebolt, of Everything You Need to Know About Renting But Didn’t Know to Ask: All the Insider Dirt to Help You Get the Best Deal and Avoid Disaster (Matt Holt, August 2023, ISBN: 978-1-6377439-2-8, $21.95). “Their aim is to protect renters by requiring more transparency from landlords and cracking down on fees that are unreasonable or unfair.”
As an individual renter you may not have the power to change national policy, but you don’t have to sit there and wait to be hit by junk fees you didn’t see coming, either.
“Understanding how rental fees work, which ones to watch out for, and how to protect yourself can save you a lot of stress and regret—not to mention money,” says Bordo.
His new book addresses rental fees in detail. Since it covers the entire rental process, from preparing for the rental search to getting your security deposit back after your lease is up, you’ll want to keep it handy as you search for new digs. With several decades’ experience as a renter, landlord, property manager, and current CEO of the largest U.S. rental marketplace, Bordo himself is a trusted authority on all things rental-related.
Here, he shares eight things renters should know about so-called “junk fees.”
First, understand what a hidden fee or “junk fee” is. When you view a rental listing, the property’s rental rate is clearly advertised. But often, there are additional fees and costs that may not be thoroughly disclosed. They can range from background and credit check fees to move-in fees to pet fees. Some may be a one-time expense, while others are recurring. NOTE to EDITOR: See attached tipsheet for a list of common hidden fees to watch out for.
“The White House calls these ‘junk fees,’ but no matter how you refer to them, the bottom line is that they’re often unexpected expenses that can seriously affect a renter’s budget,” says Bordo. “Sometimes they can derail moving plans altogether. As we’ll see, some of these fees are more legitimate than others. But until the White House 100 percent succeeds with its efforts, it’s your responsibility as a renter to identify and understand these expenses—and to plan accordingly.”
You’re not imagining it: There have been a cascade of new fees in recent years. …And not just in the realm of rentals. If you’ve flown lately, you know that there have been an avalanche of add-on fees for baggage, seat selection, and more—sometimes costing more than the fare itself.
“I suppose it was inevitable that landlords learned from the airlines’ example and looked for
opportunities to increase revenue,” comments Bordo. “We are seeing more creativity from landlords on how to get more income out of their properties. As for renters, well, they’ve grudgingly accepted it. What’s the alternative, after all?”
Landlords have more control over fees than rent. Landlords have limited ability to increase rent because it’s controlled by the market. If a landlord lists a rental at a price that’s higher than comparable properties, it’s more likely to stay vacant. However, landlords can add fees to their leases and increase the amount of the fees as needed.
“All landlords look for ways to increase their revenue and may try new fees to see if they ‘stick,’” says Bordo. “That said, most landlords aren’t trying to be unreasonable—and many are simply trying to make their own ends meet as costs rise. Unscrupulous landlords who use fees to drive up their profits unfairly are (thankfully) in the minority.”
Some rental fees do make sense… Cash-strapped renters may not want to hear it, but there’s often a good reason why landlords charge fees. Hidden costs help cover various expenses like maintenance and repairs, property taxes, property insurance, legal fees, etc.
“Take pet fees, for example,” explains Bordo. “Lots of pet owners are grumpy about this hidden cost, but it’s a bit like a toll on a highway. There are additional costs associated with having pets at a community or in a rental (think additional cleaning and damage repair), and it makes sense for those costs to be borne by the people who impose them on the community.”
…But there are mystery fees that often don’t. Truly unfair or predatory junk fees are happening in a relatively small slice of rentals, but with 46 million rental households in the United States, you can certainly find examples. Bordo points to a landlord charging a $75 fee for sending out notices. (“It’s absurd,” he says. “Nobody should be doing that.”)
“You’re most likely to see landlords behaving badly when they have a portfolio of rentals, but are under the radar from a PR standpoint,” Bordo explains. “Think slumlords who are comfortable owning crappy apartment communities and not taking care of them. Large firms are usually transparent about the fees they charge (assuming renters make the effort to learn about them) because they are concerned about maintaining a good reputation. Smaller ‘mom and pop’ landlords typically don’t get creative with fees because they just can’t administer them.”
The real issue is usually the surprise factor... While the majority of hidden fees do make some amount of sense, they are usually surprising to renters. For instance, you move into a new apartment building and there’s a fee to reserve several parking spaces for the moving truck. According to Bordo, that’s where the real frustration usually comes from: renters didn’t anticipate the fee and may not understand why they’re being charged.
“On a related note, I think fees are a reminder to renters that this is not your home to do with as you please,” he adds. “It’s someone else’s property that they are loaning to you…in return for a significant amount of your hard-earned money. Having to shell out for fees, particularly recurring ones, erodes people’s comfort in their own places.”
…Which is exacerbated by the complexity of leases. A root cause of renters being surprised by fees is the fact that lease agreements tend to be complex…far too complex, in Bordo’s opinion.
“When there’s too much complexity, people figure that they can't actually understand it, and they just sign,” he explains. “Then they’re surprised when fees come up that they didn't anticipate. We need simpler agreements and simpler fee structures.”
Your best defense is to always read your lease. Yes, as Bordo acknowledges, they are complex and often confusing. But always read your lease thoroughly. What is the landlord allowed to do? What fees are included? When and how often are they due? What happens if your payment is late? If something isn’t clear or you have questions, ask for clarification—and don’t sign unless you feel confident you can abide by the terms of (and fees in) the lease.
“If you are charged a fee you didn’t expect, go back to your lease,” Bordo advises. “It should include any fees that are charged. If the lease doesn’t say the landlord can charge the fee, you can challenge it. Speak to the landlord or his/her representative and ask them to point out the section where the fee is explained. If it isn’t there, the landlord doesn’t have a leg to stand on.”
“When I spoke with the White House team, I suggested that they work with property management software companies to get hidden fees disclosed through their systems,” Bordo concludes. “Making it easier for landlords to share these expenses up front is a good first step toward making hidden fees less, well, hidden. Until that happens, asking the right questions and thoroughly reading through the rental agreement is your best defense against being blindsided by a budget-busting fee.”
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