4 GROUNDCOVER NEWS HOUSING MAY 17, 2024 Ann Arbor Tenants Union and POTUS push back on junk fees Formed in 1968 to push back against unfair rental policy and practices, the Ann Arbor Tenants Union fought for tenants' rights such as fair and affordable rent, addressing code violations, and in general keeping landlords in check. After losing funding in 2004, the AATU faded. Recently though, the rental landscape in Ann Arbor and Ypsilanti has gotten out of control. Now led by Julia Goode and Zackarian Farah, the revived AATU has returned to the battlefield. On April 27, The Ann Arbor Tenants Union put together a rally outside of Ann Arbor City Hall to protest the exorbitant fees landlords are charging Ann Arbor renters. These “junk fees” are riders that are charged along with the usual security deposit and rent. Usually these fees are charged after the lease is signed, but some of them are applied before there is even a guarantee a unit will be available. Navigating the fees makes apartment hunting a harrowing experience. Shopping is difficult because the high application and move-in costs limit the number of places a renter can apply. The fees are not generally disclosed before signing the lease, so the apartment you thought you could afford at the time of signing is now out of your range. For someone of modest means, this can spell eviction. JIM CLARK Groundcover vendor No. 139 The AATU is not alone. In a press release from July of 2023, the Biden-Harris administration announced it is taking a stand on junk fees as well. The action stems from the fact that millions of families pay more than rent and utilities when leasing a dwelling. The most common is a non-refundable application fee. Background and credit check costs are also transferred to the potential renter, also non-refundable. As detailed in the National Consumer Law Center Report "TOO DAMN HIGH, How Junk Fees Add to Skyrocketing Rents," there is even something called a “January Fee” which is imposed during January, because it’s January. The most expensive junk fee is a place-holding fee. A place-holding fee is a charge to be put on a waitlist for a unit. Place-holding fees can be as high as $6,000, are also non-refundable, and do not always guarantee a spot. Biden’s plan to manage junk fees includes compelling rental platforms such as Zillow to be transparent about extra fees. Unfortunately, a Texas judge issued an injunction on May 10 blocking implementation of the Consumer Protection Financial Bureau's move to cap credit card fees at eight dollars per month. "Every month that the credit card late fee rule is blocked will cost Americans over $800 million," the White House said following the ruling. In the HUD publication “Policy & Practice,” aimed at municipalities, other strategies being rolled out are capping or eliminating application fees, allowing renters to provide their own screening reports, allowing a single application fee to cover multiple applications, limiting allowable fees on deposits at the time of move-in or lease signing, and clearly identifying bottom-line amounts that tenants will pay for move-in and monthly rent. Individual states are also making changes to rental policy. Rhode Island does not allow an application fee to cost more than a background and credit check, and that’s only if the prospective renter does not provide their own reports. Connecticut prohibits application fees and caps background checks at $50. The state also requires all fees and monthly rent on advertisements and the first page of a lease agreement, and prohibits move-in/move-out fees. As for Michigan, the Michigan Law Policy Program made, a presentation to the Michigan House Housing Subcommittee in February 2024. In the section titled “Possible Rental Housing Policy Responses,” these are listed as potential strategies: • protecting source of income • expunging or sealing eviction convictions • creating a standard rental application process • rethinking traditional housing policy such as allowing Accessory Dwelling Units • limiting or prohibiting junk fees. In a March article from CBS, Ann Arbor councilmember Erica Briggs said, “The Renters Commission is currently working on drafting legislation that would change our ordinances so that this (junk fees) would no longer be allowed in the city," The Ann Arbor Renters Commission was established by City Council to be an advisory board consisting of a demographic cross section of renters. What's missing in the debate on housing? J. PAINE Groundcover contributor It seems like common sense these days that the cost of housing is too high. Following on the heels of this observation is a chorus of problem solvers who, consulting “Basic Economics,” are quick to remind us that it is because “supply is too low.” The answer is therefore, simply, to “build more supply” (buildings). For the rest of us, the solution is to wait for this to happen, and hope that it solves the problem some amount of years or decades down the line. At the same time, these problem solvers leave so much unsaid: • Social housing such as that in Vienna, Austria, is cheaper and more desirable by residents than purely market-rate housing. • Co-op housing is cheaper for residents for the same type of housing, while it builds equity for those residents and offers more direct control over one’s home and community. • Monthly rental payments often cost more than mortgage payments would, while tenants are denied mortgage loans of the same amount they are already paying every month for rent! • Five million millionaires and 500+ new billionaires were created during the Covid19 pandemic, and existing billionaires got richer, just as corporate profits soared under the guise of “inflation” and a “labor shortage.” • Half a trillion dollars or more was injected into the banking system after the financial crash of 2008, given as corporate bailouts, and a similar plan was enacted during the Covid19 pandemic. Perhaps the predatory system of financial speculation and corporate irresponsibility has something to do with the high interest rates and “inflation” that have raised the cost of housing and everything else – though these problems are rarely mentioned as being a cause of the “housing crisis.” • According to Propublica, corporate real estate firms have been colluding and fixing prices, using proprietary software to jack up rents and costs for home-buyers. • Rent strikes, tenant unions, and more political actions have lowered housing costs for residents throughout history, and could do so again, without any change in the supply of housing. • Real estate developers and investors have an incentive to keep profits high, not reduce the cost of housing for everyone else. These incentives more than overwhelm the facile models of supply and demand that are supposed to bring down costs by increasing supply. • Finally, and ultimately to blame, is a system of housing as a system of investment, rather than a system geared around providing a basic human necessity. The cost of housing will hardly go down over time when it is good and economically-important for those who own current housing for the price to go up! It is a wonder why the proponents of basic economics and common sense are leaving out such critical analyses and range of solutions to the current crisis. Nevertheless, we need a new economics and new common sense for the housing crisis – one that looks at all the factors and parties responsible, and explores all available options. Ultimately, there must be a transfer of power of economic decision-making from the wealthy and large financial institutions — who approach housing as a commodity and an investment — to regular people who need homes for basic living. Only then can more significant changes be implemented that would meaningfully tackle the crisis for most of us.
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