Bill Description: Senate Bill 1089 would impose new regulations on property owners who seek renters.
NOTE: Senate Bill 1089 is related to Senate Bill 1039, introduced earlier this session.
Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?
Senate Bill 1039 would create Section 55-314, Idaho Code, to impose new regulations on property owners who are seeking renters.
Specifically, it would require that "before an owner accepts an application fee or any other payment from a prospective renter of a residential unit, the owner shall disclose in writing to the prospective renter: (a) A good faith estimate of: (i) The rent amount; and (ii) The amount of each fixed nonrent expense that is part of the rental agreement; (b) The type of each use-based nonrent expense that is part of the rental agreement; (c) The day on which the residential unit is scheduled to be available; (d) The criteria that the owner will consider in determining the prospective renter's eligibility as a renter in the residential unit, including criteria related to the prospective renter's criminal history, credit, income, employment, or rental history; and (e) The requirements and process for the prospective renter to recover money the prospective renter pays in relation to the residential unit as described in section 55-315, Idaho Code."
There are several problems with this regulation. The most basic one is that government shouldn't be micromanaging the terms of contracts or voluntary business arrangements.
Another problem is that the specific criteria used to evaluate a "prospective renter's criminal history, credit, income, employment, or rental history" may be a trade secret that a property prefers not to reveal. Such data evaluation might also be outsourced, and the property owner might not know the criteria.
For properties with multiple units available, an application may not be for a specific unit, which may preclude accurately revealing the rental amount, availability, and other information required by this section.
As with most proposed regulations, more government control is a poor substitute for the natural equilibrium of the free market. If the rental application processes used by some property owners prove unpopular, those owners will suffer natural economic consequences within the market. In an age where online reviews provide free and easy access to consumers' experiences, poor business practices can be addressed organically without government intervention.
Senate Bill 1039 would create Section 55-315, Idaho Code, which would allow a prospective renter to demand that the property owner refund an application fee (and potentially other costs) if the rent amount or other expenses differ from what was disclosed under the new section discussed above.
This provision effectively prohibits nonrefundable application fees by stating that the property owner "shall return all moneys the prospective renter paid to the owner within five (5) business days after the day on which the owner receives the written demand."
There are many reasons why the rental amount or fees and deposits may change after a would-be tenant submits an application. For example, it would be logical for the property owner to require a higher deposit if the prospective renter has poor credit or a sketchy rental history.
Additionally, there are real costs associated with processing rental applications, including staff time, credit checks and criminal background checks. These costs are incurred by the property owner even when prospective renters decide not to move forward.
Once again, however, the most fundamental problem here is that government is intruding into a process that doesn’t need its intervention. If a property owner's application terms include a provision stating that the application fee is nonrefundable, a prospective renter can either accept those terms or go elsewhere.