Rent application fees prove a hurdle to housing for Utah families
Nov 3, 2022, 11:01 PM | Updated: Nov 4, 2022, 10:47 am
OREM, Utah — For several weeks, Brenda White and her family were forced to live in a hotel, unable to find a home to rent.
“It can get pretty boring, and pretty cramped and depressing,” lamented White of her roughly 300 square feet of living space.
White didn’t want much.
“Just a place for my family so we can have a normal life,” she said. “This is not normal.”
Her family found themselves looking for new housing after their landlord decided to sell the home they had been renting. White said she’d been looking for a place to rent since April.
She applied to lots of places, but even looking for a place to live isn’t cheap.
Every time White submitted a rental application, she had to pay several fees: background checks for every adult, an application fee and even administrative fees.
White said she was upfront about her less-than-stellar financial history in an effort to not waste her money.
“I say, ‘Hey, I have a bankruptcy on there, so if that’s going to be a problem, I’m not paying the fee,’” she explained.
Regardless, White said she was told to go ahead and apply and pay the fees. But time after time, she was denied.
White said the fees feel predatory. And they add up fast. When we first spoke with her in August, she estimated she’d spent about $400 just in application fees to over a dozen landlords.
“I can’t afford to keep paying,” White said.
Limited regulation on fees
Application fees are closely regulated in some states.
They’re not allowed in Massachusetts. New York, Wisconsin and Washington, D.C., limit fees. In Washington, the application fee must cost no more than the exact cost of the background check.
Maine voters will decide next week if they want to ban application fees outright.
Here in Utah, like many other states, there is no limit to what a landlord can charge for an application fee. The only regulation requires landlords to disclose all fees upfront.
Francisca Blanc, who was with the Utah Housing Coalition when she spoke with KSL, said the hot housing market meant many prospective tenants were unnecessarily wasting money on application fees.
“Multiple tenants are applying at the same time for the same unit. They don’t even know if they’re going to be available or not,” said Blanc. “Even two minutes later, after they submit the application, it shows the unit is not available, meaning they basically wasted the $50, $75, whatever the cost is.”
Blanc said her experience points to bigger fees coming from corporate property management groups.
“These are large properties that have increased the application fee to $30, $50, $100, and there is no limit. There’s no stop to that because there is no checks and balances. There is nobody asking, ‘Why are you charging so much? Did they make a profit on this?’” said Blanc.
According to a press release from the Utah Rental Housing Association, “close to two-thirds of Utah’s apartment units are owned by companies based in Utah,” and most are not large ownership groups. “Seventy-six percent” of all unit owners “have a portfolio size of fewer than 100 units.”
With many rental units being owned or operated by the same company, Blanc suggested a solution: Once one landlord has run a background check, the tenant should be able to take that background check with them to the next place, eliminating multiple fees. “For the sake of our families, we have to use what we now have available, the technology to use one company, you take that report and go in different places,” Blanc explained. “The renter’s not going to waste so much money. A renter can waste easily $500 to $1,000 just to apply.”
The KSL Investigators learned there was a push for something like that last year in the Utah Legislature.
Rep. Gay Lynn Bennion, D-Cottonwood Heights, told us by phone she met with stakeholders about making sure landlords aren’t profiting off application fees and making background checks transferrable.
Bennion said the Utah Rental Housing Association (RHA) urged her not to pass a law, promising they would work themselves to make sure application fees improperly charged are refunded.
“The goal of the landlord should not be to say, ‘Let’s see how much money we could make profitably from an application fee,’” said RHA chair Brad Randall.
When KSL Investigators asked Randall if landlords can get into legal trouble for profiting on application fees, he told us “There’s not legal ramifications in the Utah law.”
Instead, Randall said any RHA members found profiting off application fees would be kicked out of the association.
By email, he stated, “We have never had any complaints about any members (profiting off fees) in the entire 20 years I have been here.”
There currently is no requirement for any landlord or property manager to affiliate with RHA.
Randall said Blanc’s idea of making background checks transferrable wouldn’t work.
“Every landlord, or every apartment group, can have different criteria,” he said. Those criteria may include a credit score, financial history, eviction history and criminal history.
“There’s also so many things that can be fabricated now that if someone shows up with a background check, we’re going to have to run the background anyway because we’ll need to verify,” said Randall. “It’s a scary environment not only for renters but for landlords.”
Randall said there’s some responsibility placed on renters to make sure they’re not applying at places for which they do not qualify.
“Before you go and spend $30, $50, $20, whatever it is, read the criteria,” Randall urged. “Landlords work very hard to review those criteria multiple times per year and publish those.”
Utah Application Dispute Fund
Part of Randall’s talks with Bennion last year included setting up a fund to reimburse would-be tenants of predatory application fees.
The Utah Application Dispute Fund was established in September, with an initial investment of $10,000 funded by donations. It is administered by RHA.
Randall said RHA’s goal with the fund “is to train rental property operators take applications and fees only if they have a vacancy and to disclose their criteria upfront. We train them to compare people one at a time to a set of criteria they provided in advance.”
In the instance a renter is qualified, pays the fee, and finds out the place was already rented, Randall said the fee should be refunded by the landlord. If not, the renter could apply for reimbursement through this fund.
So far, only one claim has been made on this fund and paid out for $50.
“That was a case where the property owner charged a fee when they already had another application,” said Randall. “That application was eventually approved, denying the second applicant an opportunity.”
KSL Investigators learned that single claim was made by the daughter of a Utah lawmaker.
Bennion was skeptical the fund would work, citing a lack of advertising and public knowledge of the fund. It’s a topic she told KSL she would reconsider in next year’s legislative session.
As for White, she said she never got a refund from a single landlord to whom she paid an application fee.
Eventually, one $35 fee did pay off. White was finally able to find housing in September.
“I feel great, relieved,” White said.
Have you experienced something you think just isn’t right? The KSL Investigators want to help. Submit your tip at email@example.com or 385-707-6153 so we can get working for you.