FTC wants to hear from renters about ‘unfair and deceptive housing fees’

The Federal Trade Commission is seeking public input until April 13 as it considers creating a new rule to crack down on “unfair and deceptive housing fee practices.”

Christine Marra, director of housing policy at the Virginia Poverty Law Center said Wednesday she’s seen the practices firsthand when working with clients on housing issues.

“We have looked at leases of the past several years that have stated a base rent on the first page, and then throughout the lease added or mentioned multiple fees that are mandatory,” she said, listing examples like trash collection and maintenance of common areas in apartment buildings.

It’s shocking for tenants who saw their apartment marketed at one price but were afterwards locked into a lease at another price, Marra said. For people on fixed or low incomes, the price tag sometimes stretches already thin budgets and places families closer to destitution.

Marra said she believes some landlords or rental companies are taking advantage of a “little caveat” in state code where “no additional security deposits or rent shall be charged” unless they are incorporated into rental agreements “by way of a separate addendum or after execution of this rental agreement.”

Where the hiccup happens, she said, is that prospective tenants don’t typically see and sign a lease until they are near their move-in date.

“By that point, you’ve paid your application fee and you have probably already paid a security deposit,” Marra said. “And these are not two-page leases, they can go on for 10 pages or more. We think it’s sneaky.”

Responses that people around the country have already submitted to the FTC called out landlords for mandating fees in their rent for routine maintenance that is inconsistent.

Others have said their property managers mandated cable or certain utilities costs be included in their rent, even if the tenant could get a better deal in their own name and pay for it outside of their lease.

Others lambast landlords for refusing to resolve maintenance requests and withholding deposits when renters move.

For instance, respondent Tamerra Grove described how her water bill spiked to $400 caused by a leak in her irrigation system. It took months, she claimed, for the underground pipes to her home to get fixed and her management company has allegedly refused to credit her for the additional costs.

On kept deposits, Marra said landlords have “become bolder” on the issue over the years, retaining them even when tenants don’t damage units and using the money to facilitate routine maintenance between occupants or replace carpet. It’s an anecdote she’s heard from clients more and more in recent years.

Addressing damage from tenants’ and pets is one thing, she said, but offsetting typical property management costs to past residents is another. Replacing floors every few years or repainting between tenants “are a landlord’s responsibility over time,” Marra added.

After the FTC’s public comment period winds down next week, the federal commission could draft a new rule to spur clearer communication between landlords and tenants and support consumer protections.

Ultimately, Marra said, “People can’t responsibly shop for rental housing if they’re being denied information about what the true cost is.”

Click here to submit a comment to FTC.