‘Junk fees,’ a burden to renters, are unfair and excessive in Bellingham

Ever been frustrated when booking a plane ticket or hotel room, and you’re suddenly hit with a series of extra charges beyond the advertised price? Renters and manufactured home owners in Bellingham and around the country routinely face a similar plight.

The most common unfair or excessive charges on top of rent include:

• Administrative fees beyond application fees to sign a lease
• Excessive deposit requirements
• Non-refundable pet deposits and monthly fees
• Fees to accept rent by check or ACH
• Extreme late fees
• Bogus “tenant benefit packages”

Particularly egregious examples include tenants charged $50 a month for their in-unit washer-dryer and manufactured home owners billed $65 a month to park a car on their own lot.

This problem is significant for two reasons:
1. It diminishes consumer transparency and fair competition.
2. It piles additional housing costs atop skyrocketing rents, hurting the most vulnerable and at-risk young people, families and retirees.

A core principle of consumer transparency is that the sticker price should be what you pay. In his letter to the Bellingham City Council, the director of the Bureau of Consumer Protection of the Federal Trade Commission highlighted the importance of government regulation for upfront, all-in pricing. Housing providers should be competing on the basis of lower prices and better housing quality — not who is better at disaggregating the rent structure to hide the true cost.

The economic impacts to renters can also be severe. “Administrative fees” to sign the lease as high as $500 are a barrier to housing. Nonprofits working to secure housing for vulnerable and at-risk community members are compelled to spend limited resources on extortionate move-in fees and deposits, often at the expense of other needed help. Capping total move-in fees and deposits would protect people who could otherwise afford the monthly rent, but not unnecessarily extreme move-in costs.

Excessive late fees, bounced check fees greater than the actual cost to the landlord, and notice delivery fees also increase financial strain and push people out of housing, increasing homelessness. There is no evidence that higher late fees lead to lower rates of non-payment. Research also finds some landlords extract significant profit from late fees. Bellingham should protect those most vulnerable to downward mobility and homelessness, while incentivizing tenants to pay as much as possible on time by capping late fees at a percent of the unpaid balance of the current month’s rent.

This issue extends to pets as well. While pet damage can occasionally be severe, studies indicate that pet-related damage is infrequent, with more than 90% of pet-owning households reporting no damage and average repair costs being low. Some landlords impose deposits as high as $1,000 per pet — often non-refundable — in addition to monthly fees ranging from $25 to $100. This financial burden often forces renters to give up their pets, according to Whatcom Humane Society volunteers.

The status quo for animals in housing is not in the landlord’s interest either. Under federal law, landlords cannot charge any fees or deposits for assistance animals, which are defined to include emotional assistance animals. Extreme pet fees often drive tenants to secure an emotional support designation for their animal, in which case, landlords cannot charge any fees or deposits and are left with no additional insurance against damage. Landlords should be able to charge a reasonable pet deposit — as long as those are refundable when there is no damage, just like any other deposit. That policy environment would be more fair and even lead to better outcomes for landlords.

That’s why I introduced two ordinances to prohibit unfair and excessive fees in rental housing and manufactured home communities.

These drafts were developed with a wide mix of stakeholders, including members and staff of the Association of Manufactured Home Owners, Bellingham Tenants Union, Community First Whatcom, Whatcom Humane Society, ASPCA, Northwest Youth Services, Lydia Place, Opportunity Council, WWU Basic Needs Hub, Washington Low-Income Housing Alliance, Bellingham Housing Authority, Skagit Legal Aid, Law Advocates, Northwest Justice Project, and the WA Attorney General’s Manufactured Housing Dispute Resolution Program. I also benefited from honest and sometimes difficult discussions with dozens of landlords, tenant screening staff and property managers.

Over the next weeks and months, residents will have opportunities for additional input through surveys, public testimony and focus groups.

Most Bellingham residents rent. We all want a local opportunity economy where every young person, working family and retiree can thrive. To get there, we need to reset rental market norms back to the basic principles of balance, transparency and fairness.

If you have a story to share about extortionate fees or deposits, please get in touch with Bellingham City Council. Community support and participation will be critical to passing and implementing meaningful, common-sense protections.

Jace Cotton is Bellingham City Council Member At-Large. Elected in 2023, he is serving his first two-year term. Reach him at jacotton@cob.org or at (360) 778-8214.