New Renters Act Bans Application Fees, Caps Late Fees at 3% for Federally Backed Housing

The “End Junk Fees for Renters Act” is a clear shot across the bow at the often-hidden costs of finding and keeping a place to live. If you rent a home that has any kind of federal backing—and that covers a huge chunk of the market, from HUD-assisted properties to apartments financed through Fannie Mae or Freddie Mac—this bill is designed to save you money and give you more information upfront. The core of the bill is simple: ban application fees, limit late fees, and force landlords to open their books on costs and property history before you sign anything.

Goodbye, Application Fee Black Hole

One of the most immediate changes is the outright ban on application fees and the limiting of tenant screening costs (Sec. 3). Right now, if you’re apartment hunting, you might drop $50 to $100 per application just to be considered. If you apply to five places, you’re out hundreds of dollars before you even get a key. This bill says landlords can no longer charge you any fee for submitting an application, nor can they pass the cost of running credit or background checks directly onto you. For a busy person trying to move, this eliminates a major upfront financial hurdle, especially in competitive markets where you have to apply quickly to multiple places.

The 15-Day Grace Period and the 3% Cap

The bill also takes aim at punitive late fees (Sec. 3). Under the new rules, landlords can only charge a late fee if two conditions are met. First, they have to wait a full 15 days after the rent was due before applying the charge—a significant grace period that recognizes life happens. Second, that fee cannot exceed 3% of your total monthly rent. For someone paying $1,500 a month, the maximum late fee would be $45, which is a lot less painful than the flat $75 or $100 fees some leases currently impose. This provision provides a crucial safety net for renters juggling tight budgets, ensuring a minor delay doesn't trigger a financial crisis.

Rental Transparency: Know Before You Sign

Perhaps the most powerful part of this Act is the mandatory disclosure requirements (Sec. 3). Before a landlord can hand you a lease for a covered unit, they must give you a detailed breakdown. This includes the total amount you will owe every month, including all fees, so there are no surprises. More importantly, they must disclose any past lawsuits between the owner and former tenants, describe any current pest or maintenance problems, and—here’s the kicker—show you the rent increase history for that property over the last 10 years. This moves the rental market toward true transparency, allowing a prospective tenant to see if they are moving into a building with chronic maintenance issues or one where the rent consistently jumps by 10% every year.

Defining the ‘Junk’ and Dealing with Debt

While the bill defines specific fee limits, it also tasks the Bureau of Consumer Financial Protection (CFPB) and the Federal Trade Commission (FTC) with a critical job: formally defining what constitutes a “junk fee” in the rental housing context within 180 days (Sec. 4). This rulemaking is key, as it will determine the scope of fees beyond application and late charges that might be banned or restricted. Separately, these agencies must also determine if reporting unpaid junk fees to credit agencies constitutes an unfair debt collection practice. If they rule that it is unfair, it could mean that landlords lose a major tool for pressuring tenants to pay questionable charges, changing the dynamic of fee disputes significantly.