The current administration's stance on junk fees, which aims to reduce or eliminate unnecessary or excessive fees that burden consumers and has overwhelming bipartisan support, could significantly impact rental housing providers in many ways.

According to the National Consumer Law Center (NCLC)'s recent report analyzing the nature of so-called junk fees in rental housing, "in addition to sky-high rent prices, a number of junk fees, including pet fees, deposits, pest control fees, valet trash fees, and even a "January fee," are contributing to the affordable housing crisis. Junk fees add to the already heavy burden that exorbitant rents place on renters, with over 40% of renter households—19 million households—in the United States being "cost burdened," i.e., paying over 30% of their income on housing costs.

In short, the proliferation of various fees has brought a great deal of scrutiny to the rental housing industry. Let's take a look at how this junk fee initiative may impact one area . . . the various pet fees that have become the norm in recent years.

Regulatory Scrutiny and Compliance

• Increased Regulation: The administration might introduce regulations that specifically address fees in the rental housing market, including pet fees. Rental housing providers could be required to justify and disclose these fees more transparently. Given the abundance of new pet legislation being introduced in many states, this seems a likely outcome.
• Compliance Costs: Rental housing providers might incur additional costs to ensure compliance with new regulations, including administrative costs for documenting and reporting fees.

Note on justifying pet fees: In most cases, the industry's position is that pet fees are a necessary addition to cover potential damages. However, according to the Pet-Inclusive Housing Report, average pet damages occur in less than 10% of pet-occupied units, and those damages average only $210. Industry justification of fees relative to damages and/or pet amenities will demand transparent data on actual costs.

Fee Structures

• Caps on Fees: There could be caps imposed on the amount that can be charged for pet fees. This would directly limit the revenue rental housing providers can generate from such fees.
• Elimination of Certain Fees: Some types of pet fees, such as non-refundable pet deposits or monthly pet rent, could be restricted or banned; especially in cases where multiple types of fees are being levied.

Resident Relations

• Improved Resident Satisfaction: Reducing or eliminating excessive pet fees might improve resident satisfaction and retention, as renters would feel less burdened by these additional costs.
• Increased Demand: Lower fees could attract more pet owners to rental properties, potentially increasing demand and occupancy rates.

Market Competitiveness

• Competitive Advantage: Rental properties with fair and transparent fee structures might gain a competitive advantage in the market, attracting more residents.
• Standardization: As new regulations level the playing field, rental housing providers might see more standardized practices across the industry regarding pet fees.

Innovation and Adaptation

• Alternative Revenue Streams: Providers might look for alternative revenue streams or innovative ways to maintain profitability, such as offering pet-related services (such as pet grooming or pet sitting) at an additional cost.
• Operational Adjustments: Adjustments to operations and policies might be necessary to accommodate changes, such as implementing pet-friendly amenities that justify the fees being charged.

While the administration's junk fee initiative has the potential to impact many areas of rental housing operations, it does seem likely that pet fees will be an area of focus since 66% of the country's households have pets. Savvy rental housing providers will see this as an opportunity to be proactive in evaluating existing fee structures for fairness, non-redundancy and demonstrable justification. Additionally, many rental housing providers have begun to ease or lift pet restrictions on size and breed, expanding both the pool of potential renters and the opportunity for reasonable pet fees by becoming more pet-inclusive.

If you'd like more information on how and why to make your property more pet-inclusive, please visit the Pet-Inclusive Housing Initiative for actionable data and resources.