New Research Shows Limiting Landlord Fees Can Help Low-Income Renters Access Affordable Housing and Reduce Housing Instability
Laws limiting the fees that landlords can charge prospective tenants, also known as “junk fees,” are growing nationwide. New research from the National Low Income Housing Coalition suggests that the laws could help reduce future cases of homelessness by making it more affordable for low-income renters to seek new housing.
Junk fees include application fees, processing fees, pet fees, and other administrative-related fees that landlords charge their tenants. These fees can range from as little as $5 up to $100 in some cases and can make affordable housing units out of reach for the lowest-income households.
NLIHC analyzed the effectiveness of laws limiting junk fees in Rhode Island and Connecticut. Rhode Island’s laws primarily addressed application fees for prospective tenants, while Connecticut’s legislation included rental deposits, screening fees, and late fees.
The two case studies “highlight the qualitative impact of these protections for tenants and how such laws can be critical in mitigating the threat of housing instability,” NLIHC said.
Rising Housing Costs and Increased Homelessness Risk
People earning the lowest incomes often face the highest risk of experiencing homelessness because they are likely to spend more than the recommended 30% of their income on housing-related costs like rent and utilities. These risks were significantly heightened during the coronavirus pandemic as rents skyrocketed nationwide.
The pandemic also exploded some existing fissures in local housing markets. For instance, the number of available units in Providence, Rhode Island, declined by 30% between 2018 and 2021, NLIHC found. That was one reason why rents increased by roughly 25% between February 2019, before the pandemic began, and February 2023, the 12-page report says.
The combination of decreasing available units and increasing rents contributed to Rhode Island’s increase in homelessness over the last year. As of January 2023, more than 1,300 people were experiencing homelessness in Rhode Island, and about 25% of those individuals lived unsheltered. That total represents a 13.8% increase year-over-year, accounting for more than 160 people overall.
Laws limiting junk fees in the state could prevent people from becoming homeless by decreasing the cost of maintaining housing stability. They could also prevent tenants who face financial hardships from being evicted from their homes. Data from Princeton University’s Eviction Lab shows the statewide eviction rate in Rhode Island is 3% below its pre-pandemic levels, which suggests these laws are already making an impact.
Connecticut’s Response to Rental Market Pressures
Connecticut’s rental market became similarly perilous for tenants during the coronavirus pandemic. Tenants in places like New Haven, Middlesex, and New London counties saw their rent increase by between $200 and $300 from 2021 to 2023, a time when the state had a roughly 2.1% vacancy rate, which was one of the lowest in the country, according to the report.
These conditions inspired some lawmakers to introduce a bill prohibiting landlords from charging application fees and limiting tenant screening fees to $50. These limitations reduced the overall cost of finding a home, which was especially beneficial for the lowest-income renters in the market. About 71% of the state’s extremely low-income renters—meaning they earn less than $25,000 per year—reported paying more than one-third of their monthly income on housing costs.
“When vacancy rates are so low, renters are forced to search for housing in a hyper-competitive market with few affordable and available housing options,” the report says. “As a result, prospective tenants must often submit multiple rental applications at a time, making the housing search not only a daunting but a costly task.”
NLIHC’s research also highlighted the importance of grassroots advocacy efforts by groups like the Connecticut Fair Housing Center, Connecticut Tenants Union, and the Housing Network of Rhode Island. These groups helped mobilize tenants impacted by exorbitant fees to tell their stories to lawmakers and held legislative rallies to support the corresponding bills.
The Need to Sustain Pandemic-Era Aid Programs
The pandemic proved that we need to rethink the links between food and housing in the United States. It also showed that aid programs work when agencies and service organizations have sufficient funds and clear guidance on spending aid dollars.
Contact your officials and representatives. Tell them you support keeping many of the pandemic-related aid programs in place for future use. They have proven effective at keeping people housed, which is the first step to ending homelessness.
