5 Challenges Renters Face in Today’s Housing Market

Earlier this year, Harvard’s Joint Center for Housing Studies reported that rent affordability conditions are now some of the worst on record. Meanwhile, a consumer alert from the Federal Trade Commission was released in June, outlining a few key issues affecting renters in 2024 and beyond.

From junk fees, to institutional investors, to climate-impacted utility bills, here are five challenges to be aware of that renters face in today’s housing market.

Corporate Landlords
Some renters deal directly with the owner of a property—but most renters go through a corporate landlord. The corporate landlord model occurs when corporate entities buy up properties and rent them out to individuals, using complex management structures to deal with day-to-day tenant issues. A renter might interact with a local property management company, while the real owner (and profiter) of the rental unit is an institutional investor such as an out-of-state hedge fund.

Because many corporate landlords are controlled through shell companies, they may have little interest in the upkeep of properties or tenants’ wellbeing. At the same time, many renters prefer dealing with corporate landlords over individuals. Before entering into a lease agreement, be sure to know who you’re renting from and what the chain of command is if/when you need to raise issues to your landlord.

Junk Fees
A junk fee refers to a charge which is unexpected and unnecessary. The Federal Trade Commission reports that junk fees are costing Americans tens of billions of dollars per year. For renters, a junk fee could look like an application fee on top of a credit and background check fee; a surcharge to pay rent through an online portal; a “January fee” charged at the beginning of each calendar year; and unspecified admin fees. Make sure to read your lease agreement carefully before signing and make note of any fees that seem superfluous.

Rising Utility Bills
With more extreme temperatures becoming commonplace, tenants are seeing an associated rise in water, electricity and gas bills. The ongoing effects of inflation following the COVID-19 pandemic further contribute to the higher cost of running heat, air conditioning, electric fans and so on. If you’re interested in learning more about how to save on utility bills, click here to check out a few tips from our partners at GreenPath, a national nonprofit that helps people build financial health.

Rent-to-Own Schemes
Tenants may enter a rent-to-own agreement under the assumption that after renting for a certain amount of time, they will own the home. In reality, only a small portion of the tenants’ monthly payments count toward their eventual down payment. What’s more, some rent-to-own contracts specify that the tenant pay for repairs and maintenance—fees which are typically covered by a landlord. Be sure to read these agreements carefully.

While the concept of rent-to-own is tempting, many rent-to-own contracts don’t make financial sense in the long-run. Instead, prospective homebuyers who are struggling to afford a down payment or qualify for a mortgage might choose to focus on credit score improvement and work with a qualified lender to understand their options.

Equity Skimming Schemes
Rent-to-own schemes are predatory but usually legal. On the other hand, equity skimming schemes are a crime. The scam targets homeowners who are in default of their mortgage. The fraudster contacts the homeowner and offers to rescue them from foreclosure, but only if the homeowner transfers the title of the house. Often, the homeowner will be “allowed” to stay in the house and pay monthly rent. In the end, the scammer walks away with both the value of the house and whatever “rent” money is procured in the meantime.

An equity skimming scammer is more likely to target first-time or elderly homeowners who are having trouble paying their rent. In all cases, it’s a good idea to be aware of the scam and remind family members to be cautious.