“It’s really important, as people look around to find housing that’s affordable, that they know just how much they’re going to pay every single month,” said council member Ryan Alter, who sponsored the proposal up for a vote Oct. 24. “That is sometimes easy with various apartments, and sometimes very difficult. And so I think everybody should be playing by the same rules.”
The big picture
Alter said current conditions can allow landlords to attract interested tenants based on a certain advertised rental rate and charge tens or hundreds of dollars for an application. At that point, expected monthly rent costs can be raised even further through added fees that weren’t initially disclosed.
Today, many housing providers use documents like the Texas Apartment Association’s leasing form to lay out rent and related fees for their soon-to-be tenants. While that form includes space for fee information, the state doesn’t require disclosure, and additional charges can be revealed later on. Renters may also not see a finalized leasing form until well into the application process, which typically involves other administrative fees.
Alter’s proposal would include all costs in leasing materials from the start, which he said would improve transparency and allow renters to solidify their monthly budgets. Issues with hidden fees may be experienced citywide, as well over half of Austin’s households rent rather than own, according to U.S. Census Bureau estimates.
More “junk fees” in rental housing are being reported nationwide, according to the National Consumer Law Center, or NCLC. The consumer justice nonprofit recommended in September that state and local government officials across the U.S. work to ban such fees and ramp up enforcement of any illegal activity.
The White House and Federal Trade Commission have moved to ban junk fees and the “unfair or deceptive” practice of leaving out required fees in advertised prices. Apartment listing services such as Zillow and others have also made changes to clearly display total rental costs.
Texas lawmakers have also considered the issue recently with legislation related to concert ticket pricing. As the change is considered in Austin, the NCLC found local governments in Maryland, Ohio and Washington have already banned or limited extra rental fees.
Put in perspective
Heather K. Way, a clinical professor at The University of Texas School of Law who participated in UT reporting on hidden rental fees early this year, said the practice has ramped up and become commonplace in Austin. Renters can face a complicated leasing system, she said, while “honest” landlords who do disclose extra charges may have more trouble attracting tenants.
“It creates this sort of race to the bottom where … you have to play the game, or else you’re at a competitive disadvantage if you’re disclosing your fees,” Way said.
Emily Blair, executive vice president of the Austin Apartment Association, said fee transparency has been a “standard and a commitment” among landlords in Austin for years. The new proposal under City Council consideration this fall has raised some concerns for local housing providers, she said.
Blair said the Texas Apartment Association leasing form used by many Austin providers is a national model for disclosures, and that issues with hidden fees aren’t widespread in the city. The council-proposed policy could also raise issues if fee costs changed during the leasing process, she said, potentially creating liability concerns. She also noted possible regulatory conflicts.
“It definitely would put Austin in a different standard. And I think our concern is potentially a conflict between the city’s future ordinance or that standard, and existing state law,” she said.
Alter called concerns about the proposed regulations a “red herring,” and said apartment operators already manage shifting costs and rental rates in the leasing process.
Zooming in
According to the local renter representation group Building and Strengthening Tenant Action, or BASTA, hidden fees are regularly found around Austin today.
Project Director Shoshana Krieger said they can also vary across apartment types, from additional charges for money order payments in lower-income communities to valet trash and amenity fees in higher-cost complexes.
As an example, Krieger said tenants in one community that BASTA worked with were forced into cable payments. At another, rents ended up $200 more than residents expected thanks to three separate trash fees that were initially hidden to market the apartments at a lower rental rate.
Way and law students who wrote the UT report were surprised at the extent of fees now faced by Austin renters, which she said have grown “more and more bogus.”
The UT team reported on tenants being unaware of how to opt out of optional or “quasi-optional” fees, seeing surprise fees tacked on in the middle of a rental period, and facing “onerous” move-out deposits at the end of a lease. They also noted “exploitative” one-time fees for services such as cleaning that were well above landlords’ actual costs.
The analysts found it can be challenging to try and contest those fees as well. Landlords can deduct lingering charges from rent payments, leaving renters to make up the difference or face late fees, debt collections or potentially losing their unit.
“You risk facing eviction being filed against you, which then has all these other spillover impacts for tenants and makes it very difficult if not impossible to secure any alternative housing,” Way said. “The landlord holds all the cards in this area.”
UT’s analysis of hidden fees included several examples from across the city.
Rent for one Austin apartment jumped 47% between an advertised rate and a leasing quote, which also didn’t include more than $40 in mandatory monthly fees. At another, a $50 application fee wasn’t initially disclosed, and its $1,158 monthly rent quote didn’t include an added $108 in monthly charges. Another complex didn’t disclose a $65 application fee and $400 administrative fee in a leasing quote, or $70 in monthly fees in its $2,165 rental rate.
Blair said local landlords do typically list out fees for services like valet trash, utilities, cable, parking and more on their leasing forms. She also said Austin housing providers aren’t receiving many complaints from their tenants about extra fees, and that different city strategies could more effectively respond to affordability concerns in Austin.
“From the apartment industry perspective, the issue is not as pervasive as we understand that council may think that it is as far as rental housing fees,” she said. “Right now, our concern is on other more high-priority items that do impact our renters.”
What’s next
If Alter’s resolution passes, an ordinance requiring fee disclosures for leasing applications in Austin would be developed by the end of June.
The measure could also mandate fee transparency in apartment advertising. Any updates would come with a city information campaign to inform both renters and landlords about the changes.
At a broader level, Way said addressing hidden fees could become a bipartisan issue for the Texas Legislature to tackle in 2025.
“We’ll see what happens in the next session, but if anything there’s a growing interest in reform at the state level as well,” she said.
