A New Law Forces Landlords to Change Practices in Massachusetts. While Other States Join, Here’s How to Stay Compliant

The Bigger Picture

The clampdown on junk fees echoes a broader goal of reducing high rent prices, a move orchestrated by the Biden administration. In July 2023, the Biden White House announced an initiative to combat rental junk fees and received commitments from rental housing platforms, including Zillow, Apartments.com, and AffordableHousing.com, to display all-inclusive rental costs, including application fees and deposits, as part of their listings. 

This coincided with the Department of Justice’s lawsuit against algorithmic rental management software company RealPage, which it accused of unlawfully conspiring to increase rental prices with its client base. During the Biden administration, HUD also released research and encouraged state-level reforms, such as fee caps and one-time application models, to promote rent clarity and support fairer rental markets. 

How the New Laws Could Affect Landlords

The new rental “junk fee” laws are unquestionably aimed at larger, corporate landlords such as REITs, who routinely include ancillary fees to increase revenue, which in turn boosts their stock price. Business Insider reports that since the 1990s, major REITs such as Equity Residential, Camden Trust, Avalon Bay, and Invitation Homes have separated services like pest control and waste management that were previously included in the overall rent.

Small “mom-and-pop” landlords, who own three to 10 rental properties, make up the majority of U.S. residential property owners. Generally, they do not add on junk fees to the same extent as institutional investors and are more open to negotiation from tenants. 

“Owner-managed properties are easier to negotiate,” John Kilpatrick, managing director of Greenfield Advisors in Seattle, told U.S. News & World Report. “If you’re trying to rent from a property manager or a large REIT, you’re probably out of luck.”

Many mom-and-pop landlords also have “off-lease” arrangements with their tenants, such as grass cutting, snow removal, and garbage disposal, for an agreed-upon rent reduction. From now on, officially including these agreements in a lease agreement is a good idea as oversight increases.

A Change of Administration, a Change of Heart

The Trump administration’s “Big Beautiful Bill” has chosen to limit the time period tenants can receive Section 8 vouchers to two years. 

Corporate landlords are the winners of the new legislation. It remains to be seen whether the government will also choose to help landlords increase revenue by blocking anti-junk fee laws. 

What Landlords Should Do to Comply With Junk Fee Laws

If a landlord fears they might face an investigation over additional fee charges, there are some concrete steps they can take:

1. Audit your fees: List all charges, including application costs, admin, and services, and determine which are mandatory or optional. Provide this upfront to tenants, and keep a record.
2. Update advertising and leases: Ensure the total cost of rent is clearly displayed upfront in all listings. Include an itemized fee breakdown, with opt-out instructions for optional charges.
3. Improve cancellation and renewal transparency: Make opt-out cancellation straightforward, clarifying timing for auto-renewal services.
4. Monitor developments in your local state/locality: Don’t be caught unaware by new legislation. Stay informed by connecting with landlord associations or consulting with legal advisors.

Final Thoughts 

Transparency is the key. If all fees are clearly outlined in writing, there is no cause for complaint. Alternatively, including fees within the overall rent and clearly stating what is included in the rent should be acceptable to everyone as well.

While blindsiding tenants with additional fees they were not aware of is never a good look for landlords, property owners are often portrayed as the bad guys, when it’s increased taxes, insurance, and maintenance, as well as municipalities’ code compliance, that make it difficult for many landlords to make a living. 

There is no easy solution. Landlords don’t have an obligation to provide housing to people who cannot afford it, and tenants are not obligated to rent from them. 

It boils down to supply and demand. More housing supply would create more options for everyone.