The National Consumer Law Center (NCLC) has released a brief examining the impacts of excessive fees on renter households in the private rental market. The new brief, which follows a report on the subject released last year, reveals how excessive rental fees have proliferated in the private rental market and details the methods by which lawmakers at the federal, state, and local levels have worked to address the negative impacts of such “junk fees” on renters. Read the new brief here.
Junk fees are fees charged on top of a tenant’s base rent in relation to the rental and occupancy of a unit. They can take the form of application fees, processing fees, pet fees, convenience fees, administrative fees, late fees, and any other types of obligatory fees that raise total rental costs. As of 2024, NLIHC has tracked the passage in 16 states and eight localities nationwide of legislation addressing excessive rental fees, with Georgia, Illinois, and Minnesota all having passed legislation this year to regulate the types of fees that can be charged to renters.
Rental junk fees have harmful effects on most renter households but disproportionately impact the lowest-income and most marginalized tenants. Often undisclosed, unpredictable, and arbitrary, such fees can quickly accumulate for tenants, impacting their ability to access stable and affordable housing. With the costs of renting higher than in previous years, tenants must now spend greater and greater shares of their monthly income on rent and other rental costs. Indeed, between March 2020 and July 2023, rents rose at a rate of 26.6% nationally. The U.S. Census Bureau notes that, in 2023, over 21 million renter households – or half of all renter households in the country – spent more than 30% of their monthly income on rent. (According to HUD’s measure, housing is considered “affordable” if a tenant pays no more than 30% of their income on rent and utility costs.)
Renters of color are most likely to experience the burdens created by junk fees. In particular, renters of color are more likely to pay application fees than white renters, and renters of color also pay a higher median application fee than white renters. Meanwhile, renters of color are more likely to submit five or more rental applications during their housing search, often leading to hundreds of dollars spent with no guarantee that a tenant will even secure housing. According to the National Equity Atlas, the accrual of rental arrears has the greatest impact on renters of color, with 65% of renters of color having rental debts.
In NCLC’s previous report, “Too Damn High: How Junk Fees Add to Skyrocketing Rents,” the organization identified 27 different types of fees that can arise at all stages of tenancy and that drive the cost of renting up. Such fees include application processing fees and inspection fees, which can arise during the housing search and application process, while fees such as trash fees, technology fees, and common area and amenity fees are levied during tenancy. NCLC also discusses fees that can be imposed post-tenancy or during the eviction process, such as notice fees, court fees, and attorney fees.
NCLC builds upon the original report in the new brief, ‘What The Heck, Dude!” How States Can Fight Rental Housing Junk Fees, which outlines existing junk-fee protections while providing advocacy suggestions to state and local governments to address junk fees. The report states that because state and local governments have traditionally been the primary entities regulating rental housing, laws at the state and local level may be stronger than federal policies when it comes to imposing fee prohibitions for rental housing. NCLC’s report discusses more than a dozen instances of states that have passed laws (1) targeting screening and other fees, (2) attaching conditions to the imposition of fees that landlords must fulfill, and (3) requiring upfront fee disclosures. Included in the brief are recommendations for how best to advocate for laws that ban fees outright and do not permit exemptions. The brief also highlights regulations like those enacted in Montgomery County, Maryland and Olympia, Washington, that prohibit landlords from charging fees other than those permitted explicitly by law. Montgomery County, for example, permits landlords to charge tenants a number of “regulated fees,” such as security deposit fees, late fees, lock out fees, and pet fees, while Olympia prohibits landlords from charging excessive fees related to security deposit fees and late fees, among other fees commonly charged to tenants.
NCLC’s brief also suggests collaborative enforcement actions between state attorney generals, federal agencies, and local nonprofits to ensure that new laws are upheld. The brief calls attention to the work of the Pennsylvania Attorney General, who uncovered abusive and illegal fee practices, and features similar legal enforcement efforts undertaken in Maryland, Colorado, and Cincinnati, detailing private enforcement mechanisms adopted by legal aid service providers, private attorneys, and nonprofits to ensure that tenants are protected against excessive rental fees.
The brief follows on the heels of a new NLIHC toolkit on laws that limit junk fees, which was released in August. NLIHC’s junk fees toolkit is one in a series of four toolkits highlighting certain tenant protection policies (including just cause eviction standards, rent stabilization policies, and laws that strengthen habitability standards and code enforcement procedures). The toolkits each provide an overview of one major tenant protection, detail the common components of the protection, list information about state and local jurisdictions that have adopted the protection, suggest provisions that should be taken into consideration when enacting the protection, and highlight complementary policies that can be passed alongside the protection to ensure it has the greatest impact possible. The toolkits are meant to provide foundational information about the core components of select policy interventions that can keep tenants stably housed – and free from the threat of eviction – and to help spark dialogue around the critical importance of state and local tenant protections.
Read the full NCLC report here.
Read NLIHC’s report on laws limiting junk fees here.