Biden unveils scheme to aid renters in spotting concealed charges.
The Biden Administration Cracks Down on Hidden Fees in the Rental Housing Industry
In an effort to make the true cost of housing more transparent, the Biden administration is taking action against so-called junk fees in the rental housing industry. President Joe Biden announced this initiative on July 19 at a meeting of the White House Competition Council, a task force formed to combat unfair competition and lower prices for consumers.
The initiative includes commitments from major real estate sites to provide complete fee information with each listing, as well as legislative remedies being pursued by several states.
“We’re cracking down on hidden junk fees in rental housing,” Mr. Biden said. “Folks at home are having to pay $100 or more just to fill out a rental application, even though the credit check can cost as little as $20.”
“Some [landlords] accept applications of hundreds of potential tenants, far more than they could seriously consider renting to, just to collect these fees,” he added. “It’s simply not right, and we’re going to move on it.”
This action aims to increase competition in the rental housing market and ultimately lower prices. President Biden emphasized the importance of competition, stating, “When companies have to compete, it means lower prices, fair wages, and more innovation.”
Ariel Nelson, an attorney at the National Consumer Law Center (NCLC), praised the initiative, stating, “We are greatly encouraged that the Biden Administration is taking rental housing junk fees seriously, and we recognize that the measures announced today from private companies are steps in the right direction.”
While some real estate professionals defend these fees as necessary for landlords, most agree that increased transparency will benefit consumers.
Unveiling the Hidden Fees
Rental properties often charge various fees in addition to rent, such as application fees, pet fees, pest control fees, and more. These fees are not always specified in real estate listings, making it difficult for prospective tenants to compare the true cost of renting different properties.
According to the Department of Housing and Urban Development (HUD), the tightening rental market has led to more renters applying to multiple properties and incurring multiple application fees. Some tenants even face eviction for failure to pay additional fees, despite being up-to-date on rent.
Armstead Jones, a Baltimore-based real estate consultant, highlighted the significance of these fees, stating, “Most renters don’t know the bottom line cost of the apartment until the first billing cycle.”
With over 30 percent of U.S. housing occupied by renters, it is crucial to address these hidden fees. The Biden administration’s initiative aims to create a more equitable marketplace and maximize affordable housing accessibility.
While some argue that these fees benefit landlords by avoiding rent increases, others believe they create barriers for prospective renters. Sipho Simela, founder of Matrix Rental Solutions, emphasized the need for transparency and technological tools to address potential discrimination and income-based concerns.
Dottie Herman, vice chair of Douglas Elliman, expressed support for transparency, stating, “I think that transparency will help improve owners’ reputations as being more honest and open as an industry.”
Bidenomics in Action
The White House sees this plan as part of Bidenomics, the president’s strategy to stimulate the economy by reducing prices, increasing competition, and supporting small businesses.
White House Press Secretary Karine Jean-Pierre highlighted the administration’s efforts to eliminate hidden fees in various sectors, stating, “Competition is a key pillar of Bidenomics, and it is part of the president’s agenda. We believe it’s going to lower costs for American families in targeted areas.”
However, some business leaders argue that the government is exerting too much control over the private sector. Neil Bradley, the U.S. Chamber of Commerce’s chief policy officer, expressed concerns about rising prices and limited consumer choices.
Despite differing opinions, the Biden administration remains confident in the positive impact of their actions. Economic data supports their claims, and they believe that increased competition will ultimately benefit consumers.
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