Invitation Homes sounds sort of, well, inviting. After all, it's the largest landlord of single-family rental homes in the nation. But the Federal Trade Commission wants the company to refund $48 million to customers.
The agency says Invitation has been inviting itself to deceive renters about lease costs, charging undisclosed junk fees, failing to inspect homes before residents moved in, and unfairly withholding tenants’ security deposits when they moved out.
The company has agreed to a proposed settlement order that would require the company to turn over $48 million in refunds. It will also be required to clearly disclose its leasing prices, establish policies and procedures to handle security deposit refunds fairly, and stop other unlawful behavior.
“Invitation Homes, the nation’s largest single-family home landlord, preyed on tenants through a variety of unfair and deceptive tactics, from saddling people with hidden fees and unjustly withholding security deposits to misleading people about eviction policies during the pandemic and even pursuing eviction proceedings after people had moved out,” said FTC Chair Lina M. Khan.
“No American should pay more for rent or be kicked out of their home because of illegal tactics by corporate landlords. The FTC will continue to use all our tools to protect renters from unlawful business practices,” Khan added.
Deceptive pricing, junk fees
The complaint alleges that Invitation Homes advertised monthly rental rates that failed to include mandatory junk fees that could total more than $1,700 yearly. Consumers looking for rental houses paid nonrefundable fees—including application fees up to $55 and reservation fees up to $500—based on the deceptively advertised rates.
Consumers learned that the price would be higher than advertised only when they received a copy of their lease, and sometimes not even until after they signed the lease. These undisclosed fees ranged from “services” such as “smart home” technology and “utility management,” to air filter delivery and internet packages.
Renters could not opt out of paying these fees. Since 2019, Invitation Homes has collected more than $18 million in application fees alone for deceptively priced houses, the FTC said.
Juicing the hog
The mandatory fees were also highly profitable for Invitation Homes. Between 2021 and June 2023, the complaint alleges, Invitation Homes charged consumers tens of millions of dollars in junk fees as part of their monthly rental payments.
The complaint cites a 2019 email from Invitation Homes’ CEO calling on the senior vice president responsible for overseeing the company’s fee program to “juice this hog” by making the smart home fee mandatory for renters.
The complaint also points to multiple times the company actively chose not to disclose the fees prior to consumers paying nonrefundable application and reservation fees, despite the company receiving numerous complaints about the fees after renters learned their actual monthly lease prices were higher than advertised.
The FTC also alleges that Invitation Homes has systematically withheld renters’ security deposits when they moved out of the company’s houses, including by deceptively and unfairly charging them for normal wear-and-tear, damages that existed before renters moved in, and even renovations.
These charges were not renters’ responsibility and directly contradicted Invitation Homes’ clear representations to prospective renters that security deposits would be charged only for damage the resident caused beyond normal wear and tear.
Rent hikes = big profits
Earlier this year, Accountable.US, a self-described watchdog organization, called out Invitation Homes and AMH, the largest and second-largest single-family rental companies, which made a cool, combined $953.1 million in profit in 2023 -- up 37% from 2022 -- largely thanks to rent hikes.
In addition, Equity Residential, the third largest publicly traded apartment owner, reported increased profits while raising rent, spending millions to acquire new properties and fighting lawsuits related to privacy violations in background checks and late fees.
“For many corporate landlords, there’s clearly no ceiling on rent increases or housing junk fees despite bragging about hundreds of millions of dollars in profits,” said Accountable.US’ Liz Zelnick last March.
Invitation Homes is routinely listed as one of the major institutional investors that have helped drive up home prices by making huge investments in single-family homes.