How Rental Application Fees Can Really Harm Renters
Renter application fees can quickly add up, especially for people applying to more than one apartment, and California is trying to better regulate these rates to give renters some relief.
There’s been lots of recent chatter about what the housing market will do in 2023, but little talk about what renters are up against in this year’s tight market. As salaries fail to keep pace with soaring rents, tenants at the end of their leases are faced with less discretionary income to fund a move. Rental application fees are one expense that adds up fast, and unfortunately, it seems there’s little relief ahead for renters seeking a new place to call home.
Nearly all rental properties charge non-refundable rental application fees, which can run anywhere from $25 to $100, depending on location. Most of the time, the fee applies to each adult who will live in the home or apartment. That means families with children over age 18 still living with them, and people with roommates may have to pay three or more application fees for every rental they consider.
To be fair, it costs landlords money to run background and credit checks on potential residents. Property owners and managers pay companies to screen out tenants with poor financial, criminal, or eviction histories. This is a wise move on their part because it can cost over $3,500 to evict a bad tenant.
But renters in tight housing markets may have to apply at many rental properties before they get accepted. James Lopez of Spokane, Washington told NPR that he had to suspend his months-long search for new housing because he couldn’t afford to keep paying rental application fees. Lopez already holds down three jobs and pays half his income for rent.
Lopez’s struggles led him to become a tenants’ rights activist—someone who pushes leaders to provide more affordable housing solutions. Tenant rights movements are popping up across the United States. Last November voters in California, Florida, and Maine approved measures to create or tighten caps on exorbitant rent hikes.
Although many of these groups are pushing for federal rent control measures, some people say that rent control actually makes the core problem worse. There simply aren’t enough affordable places to live. After the housing crash of 2008, low vacancy rates and a lack of new construction led to a shortage of homes and apartments that we are still feeling today.
Therefore, renters who need to move may find themselves competing with 20 or 30 other people for one available apartment. That is one part of the process that frustrates people like Lopez who are struggling to make ends meet. “It’s like, wow, they’re taking all these people’s money knowing that they’re not gonna have a chance to get it,” he said, questioning why landlords need to collect that many rental application fees when they know they will only choose one tenant.
Local and state governments are responding to the efforts led by tenants’ rights activists. Spokane’s City Council is considering a measure to limit rental application fees, while other states and cities have already enacted such laws. Last year, Eugene, Oregon capped rental application fees at $10.
California recently enacted a law that allows renters to buy their own screenings from a third-party company. These reusable screenings are valid for unlimited rental applications within a 30-day period and could save tenants hundreds of dollars on rental application fees. New York enacted a similar policy in 2019, setting a $20 limit on fees and allowing renters to purchase reusable 30-day background checks.
Unfortunately, New York has already discovered that it’s difficult to enforce these laws. Brokers are finding ways around the law, and some landlords and tenants aren’t even aware it exists. Additionally, the law fails to specify the damages landlords will face if they fail to comply with laws relating to rental application fees.
