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House kills bill requiring rental application fee protections

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A bill to regulate rental application fees in Idaho died on the House floor Monday. 

The legislation, co-sponsored by Rep. James Ruchti, D-Pocatello, and Rep. Joe Palmer, R-Meridian, would have prevented landlords from making “undue profit” off of renters applying to rent apartments. The bill would have prevented landlords from collecting application fees when there were no units available or if they have no intention of renting to the applicant. 

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Ruchti noted the bipartisan sponsorship of the legislation in his introduction, as well as the support from the Idaho Apartment Association, the Southwest Idaho chapter of the National Association of Residential Property Managers and the Idaho Realtors Association. 

“It protects renters from unscrupulous practices and for landlords and property managers this targets bad actors instead of regulating the whole industry,” he said. “It’s a positive step forward for all of them.”

But, this proposal and its backers didn’t impress the majority of legislators. It died 38-28. 

How did we get here?

Legislation on rental application fees has been a big topic of discussion this session. 

A few weeks ago, HB 442, which was also co-sponsored by the same pair of legislators, sought to block any locality from capping rental application fees. This would have overturned the City of Boise’s $30 cap on these fees it passed in 2019. This piece of legislation sailed through the House, but has yet to have a hearing in the Senate. 

HB 442’s future is uncertain after the legislature opted not to approve rental application fee regulations to go along with it. On the floor Monday, Ruchti said Senators were waiting to act on the bill removing Boise’s rental application fee cap until the legislation regulating the fees passed. 

After the bill banning rental application fee caps passed, Ruchti and Palmer came out with a new bill they said would be a more systemic fix than capping fees. This legislation, HB 617, would have had to put “best practices” around collecting rental application fees into law, but lawmakers on both sides of the aisle had questions about it before they approved it to leave the Judiciary, Rules and Administration Committee. 

HB 617 died last week and in its place, Palmer and Ruchti brought Monday’s bill, HB 730. Ruchti said by addressing specific bad behaviors in the language instead of broadly requiring best practices and putting in a more specific enforcement mechanism through the Idaho Consumer Protection Act he hoped the bill would get more support. 

The new bill prevents landlords from profiting more than $25 off of application fees after all of the costs to process the application are subtracted from the cost of the fee and allows a tenant to get their money for an application back if it wasn’t used to process their application. 

What were the objections?

Even with the changes, most legislators felt it went too far in regulating the private market. 

Rep. Ron Nate, R-Rexburg, said while this bill has good intentions, it could cause unintended consequences by making it harder for property managers to fill apartments. He said this could actually make the housing crisis worse, instead of helping renters. 

“This is another regulation that property owners need to adhere to and it’s going to make it harder for them to find good applications and it might make it longer to fill an apartment, so they might have to raise rents more often,” Nate said. “I guess the question for the body is, are these additional problems smaller or greater than the problem your’e trying to address? I don’t think we have enough information to figure that out.”

Rep. Tammy Nicholas, R-Middleton, had similar problems. Although the bill allows property managers to give tenants the option to apply for apartments not immediately available as long as they sign a waiver, Nichols said this bill could be troublesome for the developers of new units. She said often builders for new apartment complexes take applications and rent the apartments long before they are complete to help them secure financial backing. 

She said this bill and its new rules could make it difficult to fill their units. 

“Many people that own these complexes in order to get the loans that they need have to show they have these rental units rented, and if they don’t they are denied their loans and their ability to build these complexes,” Nichols said. “I can’t support this at this time.”

Margaret Carmel - BoiseDev Sr. Reporter
Margaret Carmel - BoiseDev Sr. Reporter
Margaret Carmel is a BoiseDev reporter focused on the City of Boise, housing, homelessness and growth. Contact her at [email protected] or by phone at (757)705-8066.

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