Landlords turning to shady measures for extra cash

[Tiriol]

Meanwhile, in Finland, some landlords try to use illegal contracts to get more money out of possible renters. Reported by YLE News.

Some Landlords Turn to Shady Measures for Extra Cash

Most apartment showings go by the book. However, some landlords are taking advantage of the shortage of rental flats and turning to dubious measures for extra cash.

For instance, some landlords require every person interested in renting a particular flat to pay a deposit fee.

“We have heard of cases where prospective renters have had to sign ambiguous forms at showings. Renters are led to believe that they have to pay a deposit fee in exchange for contact information, regardless of whether they have signed a binding contract. This is not legal,” says Jaana Anttila-Kangas, the managing director of the Finnish Association of Real Estate Agents.

Meanwhile, some potential tenants have been charged entrance fees at flat showings. Others have been hit by surprise bidding wars on rent. Fees can be particularly problematic for prospective renters with foreign backgrounds, who may face prejudice when trying to enter apartment showings.

According to Finland's Consumer Agency, apartment showing entrance fees and deposit fees are illegal. Binding rental agreements can only be made with one potential renter at a time.

The problem is partly due to an increase in the number of property owners putting their flats up for rent as they wait for the housing market to improve. But not all new landlords know the game rules.

“Unfortunately I think that the number of rows over rental agreements is on the rise. Unclear rental terms will lead to unnecessary court proceedings. It would be better to take time to draw up these contracts carefully,” says Virpi Hienonen, the managing director of the Finnish Association of Landlords.

YLE

I'm fortunate that I haven't encountered business practices such as these, but I have heard some horror stories about "reservation contracts" with ridiculous sums attached. I don't know what are the business practices outside Finland in rental market, though.

[Edi]

You can always ask for advice from some of the non-profit associations for advice, or the Consumer Advocate (Kuluttaja-asiamies). As well, if a contract is substantially different or had additional clauses than what is already mandated in the relevant law, chances are it's illegal.

[The Duchess of Zeon]

That's illegal in Finland? Pretty sweet to hear that. In the states it's perfectly legal and the fees are usually anywhere from $20.00 per person up to $70.00 that I've seen, and they can then reject you and keep the fee if they don't like the background information they supposedly are using the money to search for. Of course the searches only cost about ten bucks to run, and I suspect they have a quota of people to reject before renting a place to haul in as much money as they can.

[Zed Snardbody]

In the states the credit check and criminal background check cost the company a fee. We pay for the monthly service. What usually happens is the cost paid by the applicant is averaged out.

That means in the peak summer months the company can ussualy turn a small profit on the fees but in the winter is ussualy running at a loss on that small expense because there are fewer prospects.

What most companies I've worked for do, and should is make it clear that its going to cost an application fee, and ussually a deposit fee to hold the actual unit. However if you are declined or change your mind we refund the deposit since the unit is no longer being held.

A lot of companies though don't make it clear exactly what their credit standards are I ran into this a lot and didn't realize until I left the industry how shady it was. The companies that cater to apartment credit and criminal checks allow you to go into the system and set a minimum score and factors for denial. But this is set up on the corporate level and the criteria doesn't always filter down to the individual properties so their leasing agents kinda have to guess based on their experience exactly what their credit guidelines are sometimes. There are a couple universal standards; no felony convictions, you usually can't owe money to another apartment company or to a utility (not counting phone companies), no evictions and most places require bankruptcies to be closed.

Even better is that companies will own more than one property. Now if I don't have a unit to rent to you but you like the apartment enough, I can send you across town to my sister property. Now you passed my credit check but because your at a different property now in a nicer area, your score isn't good enough and now you're denied.

He's the rub, under the Fair Housing standards this is perfectly legal because Fair Housing applies to individual properties, not companies. As long as we use the same criteria for everyone that applies at that singular property its fine, even if the same company, same uniform on a different property now denies you.