Convenience comes at a premium, but Americans are increasingly willing to pay extra for services that simplify. This has naturally extended to multifamily housing, where residents often seek amenities that enhance their experience. However, these extras come at a cost and it's legitimate for owners to want to recoup those expenditures. What's critical is the approach they take.

Owners and operators must navigate the line between offering value-added services and imposing unnecessary charges. The federal government is now stepping in with an effort to tackle what it sees as unnecessary and hidden fees. Their goal isn't to erase fees but to make them more transparent for consumers.

The Junk Fee Prevention Act

The Junk Fee Prevention Act (S.916) aims to establish guidelines for fees charged by various businesses, particularly those in the hospitality and service industries. While the act doesn't directly target multifamily housing, it sets a precedent.

Key points of the legislation include:

• Mandatory display of total prices, including all fees, in advertisements
• Prohibition of excessive or deceptive mandatory fees
• Enforcement authority granted to the Federal Trade Commission and state attorneys general

Multifamily professionals can stay ahead of the curve and proactively address fee transparency in communities, ensuring from the moment a prospect walks through the door that they understand what's being charged and why. This commitment needs to span the resident's entire stay through move-out.

Distinguish Premium Service Fees from Junk Fees

The critical question is, what separates a premium service fee from a junk fee? The answer lies in the value add for residents. Premium service fees are charges associated with amenities or services that enhance resident lifestyle, provide tangible benefits and are clearly communicated. In some cases, they may even be optional or tiered to give residents spending options.

Junk fees, on the other hand, are considered mandatory charges for standard operations or services, hidden or poorly explained, and lacking clear value.

These are good examples of premium services:

• Package Management Solutions: With the rise of e-commerce, secure and efficient package handling has become crucial. A third-party package delivery solution is a service that residents often appreciate. This service allows them to schedule delivery when it's most convenient for them or have deliveries left at their doorstep with visual confirmation of delivery.
• Concierge Services: On-site staff who can assist with various tasks, from dry cleaning to restaurant reservations, offer a luxury hotel-like experience.
• Managed Wi-Fi: Residents want reliable Wi-Fi available community-wide, and providing a single carrier to manage the unique connectivity challenges in communities helps provide a more consistent connection for smart home technology, maintenance requests, and personal internet usage. Third-party vendors handle installation, maintenance and customer service for residents.
• Parking Solutions: Parking solutions allow residents to reserve unused spaces on their terms for themselves or for guests.

As the list above shows, the keys to establishing a premium service with a fee are focused on convenience and/or control by residents. These items do not feel imposed like junk fees because residents play a role in managing the service and they can easily see the value it adds to their daily lives.

Transparency Creates Resident Satisfaction

If residents clearly understand the benefits and convenience they receive from a fee, they're less likely to view it as a junk fee and more willing to pay. In many cases, it's all in the presentation and transparency of the explanation provided by the onsite leasing teams. There are steps that leasing teams can take to avoid the perception of junk fees and maintain resident satisfaction. Other strategies to consider:

• Clear Documentation: Provide detailed explanations of all fees in lease agreements and community guidelines.
• Benefits Education: Regularly communicate the benefits of premium services to residents through various channels such as e-mails and community apps.
• Opt-in/Tiered Model: Where possible, make premium services optional or set levels of service, allowing residents to choose what they value.
• Regular Feedback: Conduct surveys to gauge resident satisfaction with premium services and adjust offerings accordingly.
• Cost Breakdown: When introducing new fees, provide a clear breakdown of costs explaining the charges.

The key is to offer services that truly improve lifestyle and convenience for residents. When fees are associated with tangible benefits, residents are more likely to view them as worthwhile investments in their quality of life. Ensuring that residents feel they're getting more than their money's worth helps the industry stay ahead of potential legislation and also build lasting relationships with residents based on trust and mutual benefit.