'Junk Fees' Drive Up Already-High Rent Costs, Study Finds

One landlord even charged renters a "January fee" - whatever that is.

A new report from the National Consumer Law Center looks at the dizzying array of junk fees renters can face when they try to find and keep rental housing, which can present barriers to affordability.

Advocates warn that junk fees also jeopardize access to future housing and financial stability when they contribute to rental debts and blemishes on renters’ credit reports.

“Renters are already struggling to find safe and stable housing during a severe affordable housing shortage,” said April Kuehnhoff, senior attorney at the National Consumer Law Center and co-author of the report. “Now, on top of sky-high rent prices, renters are being forced to pay excessive and sometimes illegal late fees, as well as convenience fees, roommate fees, and even a fee just because it’s January!”

To learn more about the junk fees charged to renters and applicants, NCLC surveyed legal services and nonprofit attorneys between November and December 2022 about the types of fees that they have seen.

NCLC received 95 responses from 26 states and Washington, DC. Almost all survey respondents (89%) reported that landlords impose rental application fees. Nearly as many (87%) stated that landlords charge excessive late fees. Well over half of respondents observed utility-related fees (73%), processing or administrative fees (68%), convenience fees (60%), insurance fees (59%), and notice fees (56%).

The report identifies more than a dozen fees seen in rental housing, including a “January fee”–a fee two Minnesota advocates reported seeing charged in January for seemingly no reason.

More than a third of their income

“Nearly half of all renter households in the United States—some 19 million households—spend more than a third of their income on housing,” Kuehnhoff added. “There simply isn’t room in their budgets for junk fees.”

When excessive junk fees contribute to missed rent payments, they can create long-term barriers to housing – barriers that disproportionately affect renters of color. Nine out of 10 landlords run credit checks on all potential tenants – often automatically rejecting applicants who are alleged to owe money to former landlords and who have lower credit scores, and 63% of individuals with unpaid rent are people of color.

“When the COVID-19 economic crisis hit, Black consumers already had lower credit scores as a group than white consumers due to active and historic discrimination,” said Chi Chi Wu, senior attorney at the National Consumer Law Center and co-author of the report. “Rental debt and the junk fees contributing to the problem could further widen these racial disparities.”

To help ensure renters’ future ability to secure safe and affordable housing by keeping unfair debt collection items off of their credit reports, the report recommends that the Federal Trade Commission (FTC) and state legislatures take action.