Ann Arbor Passes Landmark Ordinance Banning Pre-Tenancy Fees

In a move that delivers a significant blow to the apartment industry, the City of Ann Arbor has passed a new ordinance banning pre-tenancy fees, waitlists, and options while instituting strict limits on application fees. The ordinance was unanimously approved by the City Council during their meeting on Monday, January 6th, 2025, and is set to go into effect on January 26th, 2025.

Under these new rules, landlords are now prohibited from charging pre-tenancy fees or maintaining waitlists for prospective tenants. Additionally, application fees are capped at $50 and must be refunded within 60 days if an applicant is not offered a lease—a provision that further complicates the rental process for property managers.

The vote followed a contentious public discussion featuring advocates from both sides. Speaking on behalf of the Washtenaw Area Apartment Association, James Nichols expressed deep concerns about the potential repercussions of this ordinance for landlords and property managers. He highlighted the burdens these regulations would place on housing providers, especially small landlords who already operate on thin margins in a competitive market.

Despite these valid concerns, the ordinance passed without dissent. The meeting saw strong advocacy from members of the Ann Arbor Tenants Union, with 13 renters sharing personal stories that appeared to overshadow the voices of housing professionals. These renters argued that high application fees and pre-tenancy charges created barriers to securing housing, a sentiment that clearly resonated with the City Council.

A Setback for Housing Providers

For landlords and property managers, the ordinance represents a significant step backward. While tenant advocacy groups celebrate what they view as a victory for fairness, the apartment industry is left grappling with the unintended consequences. By capping and refunding application fees and banning pre-tenancy charges, the ordinance risks creating additional challenges for housing providers who strive to maintain quality rental properties amidst increasing costs and regulatory burdens.

The City’s Next Focus: The Green Rental Housing Initiative

As if the challenges posed by this ordinance weren’t enough, the City Council has already shifted its focus to the Green Rental Housing Initiative. This next endeavor, part of Ann Arbor’s A2 Zero program, aims to push property owners toward energy-efficient upgrades in pursuit of the city’s carbon neutrality goals. While sustainability is an important objective, the added pressures on landlords—already navigating a tightening regulatory landscape—cannot be ignored.

Reactions from the Community

The apartment industry has expressed disappointment and concern over the passage of this ordinance. Many worry about the long-term effects on housing availability and affordability in Ann Arbor.

“This ordinance creates additional hurdles for housing providers who are already facing significant challenges,” Nichols stated after the meeting. “It’s small landlords who will feel this the most, and ultimately, tenants could suffer from reduced housing options as a result.”

Tenant advocates, on the other hand, have lauded the ordinance as a critical step toward reducing financial burdens for renters. However, the broader implications for the housing market remain uncertain as the January 26th implementation date looms.

For landlords, property managers, and housing advocates, this latest development underscores the growing challenges of operating in Ann Arbor’s rental market. The industry will be watching closely as these regulations take effect, hoping that lessons learned here will inform more balanced approaches in the future.