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Future renters in Massachusetts are in for transparency starting on Sept. 2. The state can now enforce its new “junk fee” regulations.
The change requires businesses in the commonwealth to be upfront about hidden fees. This means consumers will now know the total cost of a product or service before they commit.
“We’ve all been there: booked a hotel room, purchased concert tickets, or paid for a service that was advertised at one price and then charged for one exponentially higher—all because of hidden junk fees,” said state Attorney General Andrea Joy Campbell.
“These regulations seek to keep more money in residents’ pockets by combatting these unnecessary fees and ensuring consumers understand exactly how much and what they are paying for.”
For renters, landlords will be required to share the total price of what they’re renting out before they ask for personal information from a future tenant. Landlords must also explain why there are added fees, as well as the total cost of the transaction upfront. Potential renters also have the right to know whether the charges are optional or can be waived.
“Junk fees” are hidden, surprise, or unnecessary costs that increase the total price of a product beyond the advertised price. Usually, these junk fees are in addition to a tenant’s base rent. Ultimately, this new regulation protects tenants from paying more than what they budgeted.
But not everyone is convinced this new regulation will work. The Greater Boston Real Estate Board points out that a landlord may “opt to include a fee as part of the rent, in which case no special disclosure need be made.” It cited this example: A landlord who wants to charge $1,500 in monthly rent plus an additional $100 amenity fee may elect to simply increase the rent to $1,600.
Paying the price
Hidden junk fees are a problem not only in Massachusetts, but also in several states across the U.S. that are guilty of tacking on the hidden costs to consumers.
The National Consumer Law Center found junk fees are costing renters hundreds of millions of dollars a year, and they are pushing “safe, affordable, and sustainable housing out of reach.”
Their research found that landlords frequently do not disclose upfront the mandatory fees renters must pay. As a result, renters may not know the true amount they’ll owe every month until they begin the lease signing process—and at that point, they likely have already paid a nonrefundable application fee and other fees.
“Unexpected and confusing junk fees imposed across the economy cost families tens of billions of dollars each year and make it hard for honest businesses to compete,” said Ariel Nelson, senior attorney at the law center. “These regulations will make a huge difference for consumers, especially renters struggling to find safe and decent housing that fits their budget.”
Inaccurate pricing hurts renters and doesn’t allow them to correctly budget, which could end up forcing them out of their home if they can’t pay the monthly rent.
States such as Massachusetts that have taken action and passed some form of legislation include California, Colorado, Connecticut, Hawaii, Idaho, Illinois, Maine, Maryland, Minnesota, Nevada, New York, Rhode Island, Utah, Vermont, Virginia, and Washington.
But the research found that not all states “regulating rental housing junk fees are equally protective of tenants.” It suggests the only mandatory fees housing providers and agents should charge are a refundable security deposit; reasonable late fees that are proportionate to the monthly rent and any cost of the late payment to the housing provider; a modest fee for payments returned for insufficient funds that covers only costs; and any fees tenants are required to pay under federal or state law.
“These fees can really add up without providing any real benefit,” Jen Benson, AARP Massachusetts state director, said in a press release. “That’s why it’s so important for consumers to have all the information upfront to make informed decisions about prices and key terms of service.”