PORTLAND, Maine — A newly formed rental-housing committee is discussing how and whether to regulate application fees landlords charge tenants.
In a city with a rental-housing market as competitive as Portland, the push to regulate application fees, otherwise known as screening fees, has sparked debate in a new committee comprised of landlords and renters. Social service officials say some landlords have abused the practice of charging tenants for fees for background checks, which can be as high as $75 an application.
“Moving is a very expensive process for low-income people generally and the situation is worse when people have to spend their limited income on these fees,” said Katherine McGovern, an attorney with Pine Tree Legal Assistance who sits on the city’s Rental Housing Advisory Committee.
The abuse of application fees was the first item on the agenda for the committee on Nov. 25.
Because there aren’t limits on application fees at the state or local level, there is no requirement that any fee be tied to expenses a landlord actually incurs when running a background or credit check, McGovern said. Tenants may suspect but not be able to prove that some landlords are pocketing fees without seriously considering tenants for apartments.
“We know from talking with our clients that it has been getting harder and harder to find affordable housing, especially in the greater Portland area, and low-income tenants can end up spending a lot of money on application fees before finding a unit,” McGovern said.
The Rental Housing Advisory Committee wants to crack down on landlords collecting fees with no intention of renting to the applicant and those who don’t run background checks; commercial property owners charging multiple screening fees per applicant or for units in the same building; and landlords charging screening fees to immigrants and “new Mainers” for background checks when they have not yet been given Social Security numbers — in other words, they have no credit report to check.
Social services agencies and city officials have so far called instances of the abuses “anecdotal” and not necessarily widespread. Tenants have no recourse besides showing proof of abuse through the legal system, an option which many renters won’t pursue because it can be costly and consumer protection laws make such evidence hard to obtain.
Renters say that onerous fees serve as a barrier in Portland’s increasingly pricey housing market. Jenna Dorr said she saw firsthand how rental fees limited her apartment search when she paid more than $500 on them during a two-week period in May.
“We paid all this money and then never heard from all these landlords who did these checks on us,” Dorr said during the committee’s public comment period last month. “We really have no way to know if these checks have been done.”
Dorr said she contacted more than 40 landlords, treating each application process like a job interview. She would pay the nonrefundable application fee, and then send an immediate follow-up, thanking the landlord or lessor for their time and that she looked forward to hearing back from them either way.
Dorr’s family eventually found housing. But the process was hard enough that it gave her reason to speak up.
“We felt desperate. We have a 2-year-old daughter. We were also lucky compared to a lot of people, [because we] had considerable savings to cover those fees.
Crow Jonah Norlander, a landlord representative on the Rental Housing Advisory Committee, said that landlords are essentially business owners, and that running a background check on a potential tenant should be considered part of the cost of doing business.
“It’s a customer acquisition cost,” Norlander said. “If I want someone to live in my home, it’s my responsibility to vet them.”
That’s not a universally shared view among property owners. Rents might be even higher if the cost of application fees is absorbed by the landlords, said Travis Heynan, director of property management for Avesta Housing, and a landlord representative on the committee.
Landlords, however, can also write off most screening fees on their taxes.
Another potential solution proposed by the committee would force landlords to accept a copy of a background check run on a prospective tenant in the previous 30 days, limiting the number of times a tenant’s credit would be run.
A survey conducted by the Southern Maine Landlord Association found that 57 percent of apartments in the Portland area come tied to application fees of some kind.
Among the respondents, 59 landlords and property owners said they did not charge rental application fees for the 644 units they owned.
The committee meets again on Dec. 16, and hopes to submit a recommendation to the Portland City Council’s Housing Committee soon after.
“I don’t understand how a city [of] this size with this kind of competition doesn’t have guidelines of this sort,” advisory committee member Nora Graves said.