New Bill Bans Rental Application Fees and Caps Late Fees at 3% for Federally Backed Housing

The “End Junk Fees for Renters Act” is taking aim at those annoying, sometimes costly, fees that pop up when you’re trying to find a place to live. The core idea is to protect renters in housing that has some federal connection—meaning units assisted by HUD programs or those with federally backed mortgages (like FHA, VA, or loans packaged by Fannie Mae/Freddie Mac).

Starting with the application process, the bill completely bans landlords of these “covered dwelling units” from charging any fee just for submitting an application. Even better, they can’t pass the cost of background or credit checks onto the applicant. If you’ve ever shelled out $50 to $100 just to be considered for an apartment, you know this could save you hundreds of dollars right off the bat, especially if you’re applying to multiple places at once.

The Late Fee Lifeline

For those times when rent is due but payday is a few days off, this bill offers a significant buffer. Landlords of covered units will only be allowed to charge a late fee if it is less than 3% of the monthly rent. Crucially, they can’t even hit you with that fee until 15 days after the rent was originally due. If your rent is $1,500, the maximum late fee is $45, and you get a two-week grace period before it applies. This is a huge change from the current landscape, where some landlords charge flat, punitive fees that can be far higher and apply immediately.

Required Reading: Transparency Before Signing

One of the most important sections is the requirement for radical transparency before you sign a lease. Landlords must disclose the total monthly amount you’ll owe, including all fees. But wait, there’s more: before you commit, they must provide a summary of any past lawsuits between the owner and tenants, a description of current maintenance or pest problems, and, perhaps most telling, a 10-year history of how much the rent for that specific property has increased. This means you’ll know if you’re moving into a place where the rent jumps 8% every year, or if the owner is constantly in court with residents. The bill does include a slight loophole here, saying the lawsuit summary must be provided “as much as they practically can,” which gives landlords a little wiggle room.

Who’s Policing the Fees?

This is where things get a little complicated. Because the rules only apply to federally connected housing, enforcement is split among several agencies, depending on the type of federal backing: HUD, the VA, the USDA, and the Federal Housing Finance Agency (FHFA) for Fannie/Freddie loans. This multi-agency approach could lead to some inconsistent rule-making or enforcement across different property types, which is something to watch.

Beyond those agencies, the bill tasks the Bureau of Consumer Financial Protection (CFPB) and the Federal Trade Commission (FTC) with defining what a “junk fee” is in the rental context within 180 days. Once they define it, landlords are banned from reporting unpaid fees deemed “junk” to credit reporting agencies. This is a massive consumer protection measure—it means a landlord can’t ding your credit score just because you refused to pay an illegal or defined “junk fee,” ensuring your financial standing isn't weaponized over questionable charges.