Some advocates say they would like to see state caps on application fees or other regulations put in place to protect consumers.
“Application fees are now pretty standard to lease a unit, the challenge is that these fees are unregulated with no obligations on landlords to provide any update on the application,” said Rhonda Easley, an organizer with the Dayton Tenant Union, a group that advocates for renters’ rights. “If the average tenant pays $35 to $100 or more for application fees and they apply to three to five places when hoping to move, that quickly decreases the amount of resources available for their transition and stabilization.”
Credit: Jim Noelker
Credit: Jim Noelker
Standard practice
The National Consumer Law Center says that 90% of landlords run credit checks on all potential tenants.
Application fees are a standard practice in the rental industry and they are meant to cover the cost of processing applications, with fees usually ranging from about $25 to $50 per applicant, said Jennifer Holp, president of the Greater Dayton Apartment Association.
“Application fees primarily cover the cost of credit and background checks,” she said. “They help cover the costs associated with vetting potential tenants and managing the application process.”
Holp said landlords try to keep application fees affordable to encourage people to apply to live in their properties.
A post by Robert McCain on the American Apartment Owners Association’s website says fees help the screening process because people with credit or background issues are much less likely to apply if they have to pay for their applications to be considered.
Without fees, there’d be no disincentive for people to apply for housing even if they are very likely to fail to pass the screening process.
No rules
Sarah Weber, a staff attorney with Advocates for Basic Legal Equality (ABLE), said there is no limit on how much landlords in the private market in Ohio can charge for rental application fees.
“Outside of the fair housing laws protecting against discrimination, there are no protections, guarantees or responses required in the private rental market under Ohio law or in any locality in Montgomery County,” she said.
Local housing-seekers have posted messages on Facebook group chat pages complaining that they have paid $50, $75 and $100 to apply for rental units.
Some people claim they paid significant fees at multiple places but they did not obtain the housing, even though they have good credit scores and clean background histories. Some people claimed they never heard back from the landlords who took their application payments.
Kim Williams, a local renter, told this newspaper that some landlords will not let housing-seekers tour the inside of a home until they pay a nonrefundable application fee and get approved first. She said some places charge $75 fees.
Williams said the insides of some rental homes do not match the photos online. She said people who do not like the units they tour will have to do the whole application process over again.
Jim McCarthy, president and CEO of the Miami Valley Fair Housing Center, said unfortunately it’s “buyer beware” because fair housing laws at the federal, state and local level are silent on rental application fees unless a complainant alleges and can demonstrate that the fees are assessed in a discriminatory manner.
“Applicants should review the housing offered carefully to ensure it meets their needs and is within their budget,” McCarthy said. “They should only pay to apply to properties they are seriously interested in and can afford.”
Fees add up
Easley, an organizer with the Dayton Tenant Union, said many potential tenants are told by landlords that the fees cover the cost of background checks and back office expenses but it’s hard to know if that’s really true.
Easley said some landlords seem to accept dozens of application fees even when they only have one unit available.
“Bad landlords are able to use application fees as a hustle to collect dozens of application fees from various tenants at varying fee amounts, knowing that there is only one unit available to rent,” she said. “If tenants are paying $35 to $100 or more for the same unit in application fees and that landlord has collected dozens of applications, they have easily secured at least one month’s rent in application fees alone.”
Holp, with the Greater Dayton Area Apartment Association, said while there is no guarantee that paying a fee will result in an application’s approval, landlords are required to provide an “adverse action notice” if an applicant is denied.
The Consumer Financial Protection Bureau says that federal law requires landlords who reject or deny a tenant application because of information in a tenant screening report must notify the applicant about the rejection.
“This notice must explain why the application was denied, often citing information from the credit or background check,” Holp said.
Holp said she recommends that prospective tenants thoroughly research and visit any apartment communities before submitting an application.
“Reviewing the rental criteria provided by most companies can also help applicants understand the requirements and avoid unnecessary fees,” she said.
Rental application fees are just one of a variety of “junk fees” that some landlords charge people, said Amy Riegel, executive director of the Coalition on Homelessness and Housing in Ohio.
Riegel said landlords sometimes charge move-in fees, cleaning fees, snow and trash removal fees and require renters to pay large security deposits and three months of rent upfront.
Riegel said her organization is working to better understand the true scope of rental application fees and other junk fees to try to figure out what can be done to help consumers out.
Riegel said it’s very concerning that some landlords collect application fees from lots of people when they have one or just a few rental units available.
“We would love to see legislation that would limit the amount that can be charged and that would require landlords to have units available or to only accept a fee on a certain number of applicants per unit that they have available,” she said.
Riegel said application fees are now on the radar of many different community groups and housing organizations, plus some state lawmakers.
Multiple housing groups say application fees should not exceed what it costs landlords to perform background and credit checks.
Riegel said she wants to see more transparency in the rental market. She said it would be helpful for landlords to tell people in their listings what criteria tenants need to meet and what would disqualify their applications.
