Portland may ban landlords from charging prospective tenants application fees and other charges that can add hundreds of dollars to the cost of an apartment search.
The proposal, which goes before a City Council committee Wednesday, comes from the city’s Rental Housing Advisory Committee, a group that was constituted in 2016 but had no members until last fall.
The advisory group voted 6-2 in favor of eliminating application fees and other charges as its first policy proposal. If approved by the City Council, it will be the first such ordinance in the state and would allow landlords to charge new tenants only the first month’s rent and a security deposit, which is capped at two months’ rent under state law.
Proponents say eliminating application fees and other charges, such as inspection fees and cleaning fees, is necessary to reduce barriers to housing for low- and moderate-income renters. But at least one landlord says the city should first try to educate landlords and tenants before enacting a strict prohibition that could hurt some property owners.
For the better part of the last decade, Portland has been in the midst of a tight rental market that fueled a boom in luxury condominiums and market-rate apartments, further increasing the competition and costs for the remaining – and in some cases dwindling – supply of affordable housing. Rentals make up about 56 percent of the Portland’s total housing supply, according to the 2017 American Community Survey.
Committee member Katherine McGovern, an attorney for Pine Tree Legal, which helps low-income residents, said application fees are not currently regulated in Maine by any state or local laws. And they pose a significant barrier to housing for low-income residents who are already at a disadvantage in the city’s hot housing market.
“Our clients can end up spending a lot of money on all these fees without getting a unit,” McGovern said, adding that the fees do not currently need to be tied to any specific service or cost. “That exacerbates the challenge of getting affordable housing in this area.”
Aaron Geyer, the city’s social services director, agreed. He said that the city cannot use General Assistance, a safety net program that provides vouchers for housing and other needs, to pay application fees.
Aaron Berger, a tenant representative on Portland’s Rental Housing Advisory Committee, poses at his apartment in the Parkside neighborhood. The advisory group voted to advance a proposal to prohibit landlords from charging prospective tenants application fees. He said, “It could help a lot of people hold on or re-situate themselves when they’re being pushed out of their apartments.” Derek Davis/Staff Photographer Buy this Photo
“We’ve seen application fees increasingly become barriers to low-income and homeless individuals securing housing,” Geyer said. “This has been an ongoing impediment for many years, especially as application fees have increased.”
But Wendy Harmon, a landlord representing the Southern Maine Landlord Association, was one of two people on the advisory committee to oppose the proposal.
Although she doesn’t charge application fees, Harmon said that some small-time landlords rely on those fees to cover the costs of screening potential tenants, which can include checking credit histories, criminal records and past evictions. It’s unclear how much such screening costs.
She said Portland landlords are getting squeezed by additional fees enacted in recent years by the city, including rental registration fees, and that prohibiting landlords from charging additional fees will add to their burden.
Harmon thinks the city should allow the landlord association to educate its members about the barriers that fees can represent to some prospective tenants in an effort to discourage the practice.
“I just feel that small landlords are just being pushed to the max with fee after fee after fee and are still expected to rent to low- to moderate-income tenants,” Harmon said. “I think that we have other options. I’d rather start with education.”
A survey conducted by the association showed that many landlords do not charge application fees, according to material given to the housing committee. Those who do said they charge between $25 and $50 per tenant. Most said they screen one to four tenants before renting a unit, although a few said they screen an average of eight or nine.
Neither Tom Watson, owner of Port Property Management, nor his spokesperson responded to a set of questions sent Tuesday morning. Port Property Management is one of the largest landlords in Portland.
Jenna Dorr, a renter in Portland, said application fees can add up quickly, especially if you’re desperate for housing.
Dorr said her family, including her 2-year-old daughter, was two weeks away from closing on a home purchase in Biddeford last year when the sellers unexpectedly backed out. Dorr’s family couldn’t stay in its apartment because it had already been rented to another tenant.
She set out on a frantic search, reaching out to 40 landlords and paying $500 in application fees before finding an apartment in Portland. She’s fortunate because her family had been saving money for a down payment, but many people are not in that situation.
“We kind of felt like you have to pay these fees or else you won’t even be considered for a unit,” Dorr said, noting the stiff competition for each unit. “We never got any of the money back. That was frustrating as a renter. Sometimes it felt like the landlord didn’t have any intention of renting to us, but they were still taking our money. But we were desperate.”
Aaron Berger, a renter who serves on the advisory group, said the committee considered other options, including educating landlords and tenants, as well as allowing prospective tenants to provide their own recent background checks.
The committee settled on a prohibition, Berger said, because it would be easier to enforce.
“Finding an apartment is a moment of crisis, and application fees are a barrier to access,” Berger said. “We think this is a small thing, but it could help a lot of people hold on or re-situate themselves when they’re being pushed out of their apartments.”
Berger is hoping that the housing committee will move it forward. Chairwoman Jill Duson did not respond to interview requests Tuesday afternoon.
Portland’s ordinance is modeled after a bill submitted in the Legislature by Rep. Christopher Kessler, D-South Portland. The Legislative Council, a bipartisan panel that screens bills during the short session, decided against taking up Kessler’s proposal.
Kessler said his bill is modeled after similar laws in Massachusetts and Vermont. In addition to application fees, it would also have prohibited move-out cleaning fees, move-in inspection fees, late and eviction fees for some tenants, and maintenance fees for bedbug removal.
Kessler said he has first-hand experience with burdensome application fees.
“In our tight housing market, you will have many people applying for a single apartment, paying a fee and never hearing back from the landlord,” Kessler said. “Thus, there is a real concern that some landlords are potentially profiting from accepting application fees with no intention of renting to the applicant.”
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