Charging extra for more tenants

13 Replies

I have a new property in TN that will be available for rent soon. It's 975 sq ft 3 bd / 1 ba. The interest I'm getting is from families where there's a mom, dad, and 4 kids. I don't discriminate against kids, but 6 people seems like a lot of people to fit in such a small house. 

Can I have a base rent rate and state it's for up to 3 people, with a fee ($50/month?) for each additional tenant? Has anyone done this?

@Matthew S.

Matthew,

    While I have never done this, I don't see a problem doing it. However, before you advertise as such, I would just make sure it does not violate Fair Housing laws. I don't see how it could, but you have to be careful with how you advertise the property. One additional thought, if you don't want a family of 6 to move into your 3 bedroom rental, just keep advertising until you find the right fit. In my opinion the $50/ month per extra person might not cover the damage 4 kids might do to your property. Just a thought. Hope it works out for you

not if you want to keep your house as that would be discrimination. Look up your local occupancy laws. They will describe the occupancy limits. Could be 2 people per bedroom or 2 people per bedroom plus 1. Ours has a occupancy based on square footage of living area as well. Even then you would not be able to legally charge more to break the occupancy limits. 

IMO that would be a violation of Fair Housing based on familial status.

The usual formulas for number of occupants are:

2 x number of bedrooms

(2 x number of bedrooms) + 1

The one at the end is to allow for sleeping on the sofa ;)

So a 3BR house would sleep 6 or 7.

This is the release from HUD in Dec. 1998 specifying their policy (not law) for fair housing. They used to use the 2/bedroom, then they said there are lots of factors, sq. footage, facilities, etc. Essentially, everything is a guide and flexible.

If you don't want large amounts of family in a place, just get a different tenant and decline the others. There are many ways to do that without having to specify that it is because they have too many littles running around.

Is there a reason (perhaps you are paying utilities) for your concern?  If that is the case you can shift those costs to the tenant.  I put a excessive use clause for water in my lease since we pay it.  If it is more adults then you can limit parking if that is an issue.

You may have some local laws about occupancy like number of unrelated occupants or minimum square feet to consider it a bedroom (you would call a room a den or office if it doesn't meet the minimum bedroom size). Otherwise for  a normal size bedroom  2/bedroom is generally considered ok.  Charging higher for more occupants would probably be considering fair housing discrimination. Other then that it is about how they keep the place.   You can have one kid/bedroom and a poorly maintained property as easily as you can have two.   Not everyone lives the same. Reject people on the criteria you have, consider at least a drive by to evaluate the applicant.

@Matthew S. This would absolutely be illegal. Some people on here have given you good advice, and some very bad advice. HUD memos and guidelines have the FULL FORCE OF LAW. Fair Housing laws are drawn not just from written laws, but also from regulations issues by government agencies, memos from agencies and case law. The fact that something can be quite illegal when there is not a "law" that says so escapes many people with a novice understanding of the law.

A 3 bedroom house can at the very minimum anywhere in the country house 6 people. (2 per bedroom). There are some places that it can house 7 people. (2 per bedroom plus 1).  There are other places that will be even less restrictive and allow more people based on a square footage basis.  

You have 6 people that want to live there though so you have to allow them as an applicant and you absolutely can not charge them more money for rent.

Thanks for sharing the occupancy rules and Fair housing regs. I should have looked further into this before sharing my opinion. I apologize.

2 per bedroom + 1 is the law here.  So if you were here you cannot deny a tenant that has 7 or less people.  

Like most landlords I require all adults to apply and pay application fee.  Lease is written so that each has full financial responsibility.  

I have had a 3 BR with 7 (5 kids) and they thrashed the place in a short time span.  I kept their entire deposit but their damage exceeded the deposit but not by that much.  I did not try to collect for the additional damages but would have if they had significantly exceeded their deposit. 

It was amazing the damage they did to the carpet.  They also had ringed a beautiful tree that I brought in an arborist to save (fee taken from the deposit).   They had also knocked down a fence but blamed the utilities reader but neighbor states they used the gate like a carnival ride and the kids broke fence (I suspect kids broke fence, set it back upright, did not tell parents, utility reader knocks over broken fence, parents believe utility reader broke fence).  I did not collect for broken fence (too hard to prove even with neighbor's statement). 

So tenant basically covered all damages but my turn around on the unit was almost 2x normal (I typically takes me less than 2 weeks to be able to show a property). Much of this was arborist time to save 2 trees with heavy trunk damage. 

Thanks for the replies, everyone. To clarify, I don't care if it's a family with kids, I was just concerned about the sheer number of people (of any size!) in such a small place. Still looking for qualified tenants (i.e. income and job stability). Haven't had problems with my other properties, but this one seems to be attracting a lot of Section 8 folks (I don't take Section 8), even though it's in a nice neighborhood.

@Matthew S. You may want to check if you can legally not take section 8 as well. In many states it is illegal to deny someone based on that. I do business in 5 different states, and all of them do not allow you to deny based on the source of the funds for rent. I do believe though that there are states that do allow you to deny section 8, I just dont know which ones they are.

Originally posted by @Russell Brazil :

@Matthew S. You may want to check if you can legally not take section 8 as well. In many states it is illegal to deny someone based on that. I do business in 5 different states, and all of them do not allow you to deny based on the source of the funds for rent. I do believe though that there are states that do allow you to deny section 8, I just dont know which ones they are.

 Ha ha – yes, I can legally refuse Section 8. Section 8 in TN has crazy high standards that properties need to conform to in order to qualify for being able to take it. It's not just a check/food stamps, but a whole system that ensures properties are up to the state's standards. And I would rather not be a landlord than have to deal with that level of bureaucracy.

As Matthew stated you can absolutely avoid Section 8 here in TN. You have to sign up to accept Section 8, have your premises inspected, and repair/replace any deficiencies in order to even participate in the program. If you don't want Section 8, you simply decline to sign up in the first place. Tenants can ask, and they can also ask if you would be willing to sign up for the program, to which you simply respond "No". 

We advise straight away that we do not accept Section 8. I have Zero interest in meeting the inspection criteria, nor in renting to that level of low-income renters. Our housing is intended for working, stable lower and middle-class individuals/families. 

As for the OP, you cannot legally do what you suggested. I would be cautious going forward that you do not give the impression of discriminating, as "secret" shoppers sometimes check rental listings for such issues, especially if someone complains. 

I'm glad some experts chimed in on the legality of your initial question. My rule of thumb is when you're considering something that may be even the slightest bit of discrimination you remember that the first time offender fee can be levied up to $16,000. At that number you make sure you're playing fair for sure!

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