Menu ≡

Regulatory Crackdown on “Junk Fees”

The rental housing landscape is undergoing a significant transformation as federal and state regulators intensify their scrutiny of hidden charges and unexpected costs in the property management industry. If you’re a landlord, property manager, or tenant, understanding the evolving regulations around “junk fees” is crucial for staying compliant and maintaining transparent rental relationships.

What Are Junk Fees in Rental Housing?

Junk fees are unexpected, often hidden charges that tenants encounter beyond their monthly rent and standard deposits. These fees have become increasingly common in apartment living and rental property management, ranging from application fees and administrative charges to move-in coordination fees and monthly service charges that don’t correlate with actual services provided.

Common examples of junk fees in rental housing include:

  • Excessive application processing fees
  • Monthly “amenity fees” for basic services
  • Trash collection fees (when trash service is standard)
  • Convenience fees for online rent payment
  • Mandatory renters insurance purchased through the landlord
  • Lease renewal fees
  • Package delivery charges
  • Pet rent (in addition to pet deposits)
  • Carpet cleaning fees charged upfront
  • Mail key fees

While some fees represent legitimate costs, many have drawn criticism for lacking transparency and adding hundreds or even thousands of dollars to the actual cost of renting.

The Regulatory Landscape: Federal and State Actions

Federal Initiatives

The federal government has taken a strong stance against junk fees across multiple industries, with rental housing being a primary focus. The Federal Trade Commission (FTC) has proposed rules requiring all-in pricing transparency, meaning landlords and property management companies would need to disclose the total cost of renting upfront, including all mandatory fees.

The Biden administration has specifically called out rental application fees, lease-breaking fees, and various service charges as areas of concern. While federal regulations continue to evolve, the message is clear: transparency in rental pricing is no longer optional.

State-Level Regulations

Many states have moved faster than federal agencies, implementing their own junk fee restrictions:

California has been particularly aggressive, with recent legislation limiting application fees to actual screening costs and requiring detailed itemization of all charges. The state has also restricted certain move-in fees and mandated greater transparency in lease agreements.

Colorado passed laws requiring landlords to disclose all fees in advertising and limiting application fees to the actual cost of background and credit checks.

New York has implemented strict regulations on broker fees and application processing charges, dramatically changing the rental market dynamics in New York City.

Washington requires detailed fee disclosures and limits on non-refundable fees beyond the first month’s rent and security deposit.

Other states, including Oregon, Connecticut, and Illinois, have enacted or are considering similar legislation aimed at protecting tenants from excessive and unexpected charges in rental housing.

Impact on Property Management Practices

For property managers and landlords, these regulatory changes require significant adjustments to business practices and revenue models:

Revenue Model Restructuring

Many property management companies historically relied on various fees to supplement rental income. With junk fee crackdowns, landlords may need to adjust base rent prices to maintain profitability while eliminating questionable charges. This shift requires careful financial planning and market analysis to remain competitive while covering operational costs.

Enhanced Disclosure Requirements

Transparency is now the cornerstone of compliant property management. Landlords must clearly communicate all costs associated with renting a property, including:

  • Total monthly housing costs (rent plus all mandatory fees)
  • One-time move-in costs
  • Optional services and their associated costs
  • The specific services or costs each fee covers

Technology and Administrative Updates

Property management software and leasing platforms need updates to comply with all-in pricing requirements. Marketing materials, websites, and rental listings must display total costs prominently, not just the base rent that attracts initial interest.

Landlord Tips for Navigating Junk Fee Regulations

If you’re a landlord or property manager, here’s how to adapt to the changing regulatory environment:

Audit Your Current Fee Structure: Review every fee you currently charge and determine whether it represents a legitimate cost or could be considered a junk fee under new regulations. Consider eliminating fees that don’t directly correlate with services provided.

Increase Pricing Transparency: Build all necessary costs into your base rent rather than adding surprise fees later in the leasing process. While this might make your advertised rent appear higher, it builds trust with prospective tenants and ensures compliance.

Document Actual Costs: For fees you do charge, maintain detailed records showing they reflect actual expenses. Application fees should match the cost of background checks and credit reports, not generate profit.

Update Lease Agreements: Work with a real estate attorney to ensure your lease agreements comply with federal and state regulations. Clearly itemize all charges and explain what each fee covers.

Stay Informed: Regulations continue to evolve. Subscribe to property management industry publications, join landlord associations, and consult with legal professionals to stay current on compliance requirements in your jurisdiction.

Simplify Your Fee Structure: The fewer line items on your rental costs, the easier compliance becomes. Consider whether you truly need separate charges for amenities, services, or administrative tasks.

Tenant Tips: Understanding Your Rights

For tenants navigating apartment living and rental housing, understanding junk fee regulations empowers you to make informed decisions and protect your rights:

Request Total Cost Breakdowns: Before signing any lease, ask for a complete breakdown of all costs you’ll pay monthly and annually. Don’t accept vague “additional fees may apply” language.

Compare True Costs, Not Just Base Rent: When apartment hunting, calculate the total monthly housing cost across different properties, including all mandatory fees. A seemingly cheaper apartment might cost more once all fees are added.

Question Questionable Charges: If a fee seems excessive or unclear, ask for justification. Request documentation showing what service the fee covers and whether it’s mandatory or optional.

Know Your State’s Laws: Research tenant rights and fee restrictions in your state. Many states have tenant advocacy organizations that provide free resources explaining your protections.

Document Everything: Keep records of all fees charged, especially if they seem questionable. This documentation becomes valuable if you need to dispute charges or file complaints with regulatory agencies.

Report Violations: If you believe a landlord is charging illegal junk fees, report it to your state’s attorney general office or consumer protection agency. Many states have complaint processes specifically for rental housing issues.

The Future of Rental Housing Fees

The regulatory crackdown on junk fees represents a fundamental shift in rental property management practices. While the transition period may create challenges for landlords adjusting their business models, the long-term result should be a more transparent, fair rental market that benefits both property owners and tenants.

Industry experts predict that increased regulation will lead to:

  • Standardization of fee structures across the property management industry
  • Greater competition based on total housing costs rather than artificially low advertised rents
  • Improved tenant satisfaction and retention due to pricing transparency
  • Reduced legal disputes over unexpected charges
  • Technology innovations that simplify compliance and disclosure

Best Practices for Rental Maintenance and Transparency

Beyond fees, maintaining positive landlord-tenant relationships requires transparency in all areas, including rental maintenance. Clear communication about who’s responsible for various maintenance tasks, how quickly repairs will be addressed, and what costs tenants might reasonably expect helps prevent disputes and builds trust.

Property managers should establish clear maintenance request procedures, response time commitments, and cost-sharing policies for different types of repairs. This transparency extends the spirit of junk fee regulations into day-to-day rental property management.

Conclusion: Embracing Transparency in Property Management

The regulatory crackdown on junk fees in rental housing isn’t just about compliance—it’s an opportunity to build better relationships between landlords and tenants based on transparency and fairness. For property managers and landlords, adapting to these changes early positions you as a trustworthy housing provider in an increasingly competitive market. For tenants, understanding these regulations empowers you to make informed decisions and advocate for fair treatment.

Whether you’re managing multiple rental properties or searching for your next apartment, staying informed about junk fee regulations protects your interests and promotes a healthier rental housing market for everyone. As regulations continue to evolve, the core principle remains constant: transparency in pricing and honesty in business practices benefit all parties in the rental relationship.

The future of property management is clear. By embracing transparent pricing and eliminating questionable fees, the rental housing industry can build trust, reduce conflicts, and create better outcomes for landlords and tenants alike.