What is the average rental application fee?
Are there rules and regulations regarding charging tenants and applicants an application screening fee?
Can co-applicants and roommates be charged an application fee?
These are a few of the questions this article will answer and help guide landlords through the applicant selection process.
Average Rental Application Fee
$25 per applicant is the average fee that we see landlords charging. For this reason, we use it as the standard fee on our free rental application on our site.
The location and market of the property plays the biggest factor in fluctuating application fees.
If the rental unit is in a very desirable neighborhood, and warrants a higher rent, then it’s perfectly acceptable to charge more.
In some cases we’ve seen $50-$100 per applicant.
However, before adopting the idea of market based fees, you must consider your local state regulations first to be sure they don’t enforce specific guidelines to charging application fees.
You’ll also want to make sure you have an up to date and compliant rental application form.
You can grab your free application form by entering information below.
Some states like California, Virginia, Wisconsin and Minnesota have more specific laws and regulations regarding the collection of rental application fees by landlords. The laws are often similar and can be summarized with some specifics below:
See the full regulation and law at the CA .gov site.
- Landlords may charge (per applicant) a maximum screening fee of $35
- The fee must be used for “actual” out of pocket costs of obtaining a background check and the “reasonable” value of time spent by the landlord obtaining the background information.
- If the landlord charges a screening fee, they are obligated to provide the applicant a copy of the background check upon request.
- If the landlord spends less on the background check and their time than what was charged, a refund must be issued for the difference.
- Unless the applicant agrees in writing, the landlord may not charge a screening fee if the rental unit is not available.
- A landlord must give applicants an itemized receipt for the charges.
Although it’s not free, a great resource for California landlords is the California Landlords Law Book found here
Language regarding the Virginia rental application fee laws can be found on this VA Housing Department Document.
The most notable take-away from the state of Virginia’s laws concerning application fees is if the applicant fails to rent the unit and the fee exceeds $32, the landlord must refund the fee within 20 days after the rejection. However the refund shall only be required to cover all sums in excess of actual expenses incurred. So if the landlord charged $30 for the fee, and can only itemize $20 for the background check, then the applicant would be due back $10.
Language regarding the Wisconsin rental application fee laws can be found on page 8 of this Badger Law document.
Most notable take away for Wisconsin is that “the landlord can only charge the actual cost of obtaining a screening report, and never more than $20.”
NYC (Specifically within New York City) http://www.housingnyc.com/html/guide/basics.html#Fees
A common misconception is that you must charge what you’re paying for their background check. While obviously this number should be relative, there is nothing wrong with figuring in your time and energy as an expense as well. So if the tenant screening cost on that applicant is $25, it is perfectly acceptable to charge $30, accounting for the additional $5 as a processing or administration fee.
In typical “it takes one to ruin it for the rest” fashion, landlords who charge an application fee under the premise that it will cover the cost of the background check, but never intend to run the background check will find themselves in trouble. Application fees are not intended to be for-profit and should never be seen as a source of revenue. Nothing screams fraud like charging for something that you shouldn’t and tenants will quickly feel alienated. Being fair and honest about the screening process and the charges associated is best-practice for any landlord.
Application Fees Can be The Best Pre-Screening Tool
Most experienced landlords agree that the fastest way to deter the time-wasters and tire-kickers is to be upfront about charging an application fee to cover the cost of a background check. In most cases, the tenants that know they have evictions or criminal records that will appear on their background checks will not pay to have you find this information and disqualify them. For those that gladly agree, most landlords will apply the rental application fee to their first month’s rent.
Landlord Tip: Always be sure to include the exact fee amount on the rental application that will be signed by the applicant. Unless state law prohibits, mention the fee is non-refundable. After all you won’t be given a refund by the screening company if you deny that applicant.