When you move into a new apartment or rental home, you expect your new landlord to ask for first, and maybe last month’s rent, and possibly a security deposit. After that, all you need to do is make sure you pay your rent on time, right?
Not these days.
Over the last decade, renters have been subject to a welter of new fees, many for amenities or services once included in their rent. The change coincides with the investment of billions of dollars in rental properties by private-equity firms, hedge funds, real estate investment trusts and other institutional investors.
These firms boost their profits by cutting costs and increasing revenue — not just by raising rents, but also by collecting more in fees. One private-equity owned company disclosed it collected $14 million in fees and another $12 million in unrefunded deposits in a single year.
Back to the future
“This maneuver on the part of landlords is not new,” says Janet Portman, co-author of the book “Every Landlord’s Legal Guide.” “Back in the ’80s landlords did all sorts of things to rake in more revenue.”
One beauty was the “Tenant Initiation Expense Reimbursement fee” landlords collected when people moved in. Tenants challenged the fee in civil courts and judges ruled that it was nothing more than a nonrefundable security deposit and thus illegal.
Some fees have been around for years and can be found in most leases. Application fees, for one, cover the landlord’s cost of running a credit check to make sure you can afford the rent. Late fees and early-termination fees reimburse landlords for losses when tenants don’t fulfill their obligations in leases.
Other fees are new and not widely known: an elevator-reservation fee, a decoration fee and a pipe-snaking fee are a few examples. The legality of such fees varies from state to state. A few outlaw certain fees, others say fees are unenforceable if not in the lease. Most have minimal renter protections. States are more willing to limit certain levies, such as late fees; Maine caps them at 4% of monthly rent; landlord-friendly Texas allows as much as 12%.
An encyclopedia of fees
Here are some fees to watch out for when you read your lease, and it’s important to read leases carefully and completely. Investigate your potential landlord to see if past tenants have complained about egregious fees. Also, know local rental laws, and which government agency enforces them. Many landlords are desperate for tenants just now, so it’s worth trying to eliminate fees from the lease.
Administrative fee: A vague catchall that can duplicate the application fee or make you pay for an explanation of why a landlord is withholding some of your security deposit.
Amenities fee: This shifts to tenants the cost of pool maintenance and other operating expenses once considered responsibility of the property owner.
Application fee: Usually covers the cost of acquiring a copy of your credit report and having the landlord or property manager review it to decide if you can afford the rent.
Cleaning fee: A nonrefundable charge that either duplicates a security deposit or takes its place but does not have to be returned when you leave.
Convenience fee: A charge some landlords levy on renters for the convenience of using the landlord’s online portal to pay their rent. Others collect the fee when renters pay their rent by credit card, requiring the landlord to pay a 1.5% to 3% transaction fee to the card company.
Damage fee: Another nonrefundable charge that either duplicates a security deposit or takes its place, but does not have to be returned when you leave.
Delivery fee: The sum that property owners can charge tenants to cover the cost of posting an eviction notice on their door.
Elevator-reservation fee: A novelty limited to high-rise buildings with freight elevators, it ostensibly compensates the building owner for the inconvenience of your using the elevator to move furniture and boxes to your floor.
Guest fee: A sum meant to cover the added wear and tear on washing machines, swimming pools and other shared facilities caused by your extended-stay guest.
Move-in fee: Also known as a “finder’s fee,” it is a nonrefundable charge nominally to cover the cost of any damage you do while moving in. Such fees are illegal in some states and cities, chiefly those with rent control.
Move-out fee: Same idea as the move-in fee. Ostensibly to cover the cost of repairing damage you do while moving out. Not refundable if no damage is done.
Pet fee: One of several ways for landlords to clean up or repair any damage caused by your pet. Sometimes referred to as “pet rent,” which is a supplement to your regular rent. Some landlords prefer a “pet deposit” when you (or your pet) first move in.
Pipe-snaking fee: This is tricky. Routine maintenance is the property owner’s responsibility, but if a tenant tries to send a disposable diaper down a toilet, that is the renter’s responsibility. The landlord may fix the problem or hire a plumber to make sure the job is done correctly, but the renter is likely to be on the hook for this fee.
Redecoration fee: A nonrefundable charge that seeks to make tenants pay for normal wear and tear that traditionally has been the sole responsibility of the property owner.
Telecom fee: A monthly payment for basic cable service and internet access from a provider chosen by the landlord, whether you use their service or not.
No list is exhaustive and not every landlord uses all — or even any — of these charges, which is why it is important to read your lease closely. If you come across something that looks or sounds like a fee, Portman recommends that you assume “it’s just another way for landlords to collect money you won’t get back.”