M
any tenants are facing a surge in fees for services that were once included in the rent. Landlords, particularly large corporate ones, are using these fees to boost revenue as rental costs rise.

    Marianne Napoles, a tenant in California, saw her monthly fees jump from $44 to $165 after she renewed her lease with Equity Residential in 2020. Her rent increased by about 70% over the decade, while her fees nearly quadrupled. Equity's founder, Sam Zell, predicted 25 years ago that half of revenue for publicly traded residential real estate firms would come from income other than rent.

    Large landlords like Progress Residential and Greystar are advertising one price for rent and then tacking on a range of optional and mandatory costs. A 2024 lease from Progress includes at least 15 potential fees, including $125 for "Lease Administration" and $75 for a "trip" fee on top of repair costs.

    The Federal Trade Commission (FTC) and states are scrutinizing rental fees, with some legal actions and new regulations. In January, the FTC sued Greystar, accusing it of hiding fees from prospective renters. The company called the suit "agency overreach."

    About 22 states have protections limiting fees, according to data compiled by the National Low Income Housing Coalition. Colorado passed a bill allowing renters to reuse background checks for up to 30 days to avoid multiple fees.

    The industry's position is that the charges cover legitimate services tenants should pay for, and some landlords say it's long-standing practice to advertise rental pricing without fees. However, the charges have also been labeled "junk fees."

    The real estate lobby argued that fees are not deceptive and that landlord-tenant relationships should be exempt from regulations. The FTC omitted rentals from its rule on junk fees in favor of case-by-case enforcement.

    Landlords who use AppFolio, a property management tech company, may pass onto tenants those fees: $2.49 for each eCheck or 3.49% of their rent if they use a credit card. This strategy has been lucrative, with AppFolio's revenue growth driven by 48% growth in ancillary revenue.

    Regulators have been slow to catch up to the spread of rental fees. A California judge ruled that Equity crossed the line with a 5% late-payment fee that violated a state ban on marking up fees. The company argued that the calculations didn't take into account rising personnel costs and was considering an appeal.

    The Biden administration called for restrictions on so-called junk fees, but ultimately did not include rentals in the new rule. Listings within a property manager's control may not be complete, and the lack of transparency has cost renters hundreds of millions of dollars, according to the FTC case against Greystar.