Volume 30

The Case Against Rental Application Fees

by Eric Dunn

Rental application fees have become exceedingly common throughout the United States rental market, with housing seekers routinely paying anywhere from $30 to over $50 per adult just to apply for admission. These fees are typically justified as compensation for a landlord’s costs in conducting background screening on applicantsthough certain consumer rights abuses are common, such as imposing fees above the landlord’s actual costs or extracting fees from applicants who are never actually considered for the housing.

While a single application fee may be slight in the context of rental housing that will cost hundreds or thousands of dollars per month, application fees can raise enormous barriers for renters with criminal history, past evictions, landlord-tenant debts, or other significant admission barriers. Not only may such households face the prospect of paying application fees repeatedly before being accepted as tenants, but they are also incentivized to steer themselves toward lower quality housing they perceive as less selective and hence less likely to deny admission. With extensive research showing the most significant barriers to obtaining rental housing are disproportionately common among certain protected classes, especially Black female-headed households, the practice of charging rental application fees appears likely to drive residential segregation.

This article highlights and explains the most significant problems that arise from rental application fees and suggests three key responses for fair housing and consumer advocates. First, the article describes various legislative approaches that states have taken to limit or prohibit rental application fees. This includes a discussion of so-called “portable tenant screening reports,” which a housing seeker can purchase one time and then theoretically use repeatedly until housing is secured. Second, the article identifies plausible legal theories advocates may pursue under existing laws to curb abuses around rental application fees and mitigate the effects on communities. Finally, the article identifies needed research, particularly around the collective impacts rental application fees appear to cause in steering nonwhite renters to lower-quality housing in areas of diminished opportunity, which could greatly strengthen the case for legislative action and support more far-reaching litigation remedies.

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