Homes of Invitationsthe largest owner of US single-family rental properties, has agreed to pay $48 million to buyers and change some of its practices, according to a proposed settlement Federal Trade Commission (FTC) announced on Tuesday.
According to the FTC, Invitation Homes advertised monthly rental rates without including mandatory “junk fees.” It also allowed tenants to move into “substandard” housing, “withhold tenants’ security deposits” when they moved out, and used unfair eviction procedures.
The action against Invitation Homes is the first from the FTC staff established earlier this year. This group was tasked with investigating unfair, deceptive and anti-competitive practices in the rental housing industry.
“No American should have to pay rent or be evicted from their home because of the illegal tactics of corporate landlords. “The FTC will continue to use all of our tools to protect employers from illegal business practices,” FTCC Chair Lina M. Khan said in a statement.
In a statement, Invitation Homes said it is paying monetary relief but no civil penalties, and the agreement does not contain an admission of wrongdoing.
“Invitation Homes believes its disclosures and processes are the best in the industry, among its professional peers and millions of small owners of single-family homes for rent,” the company said. “Today’s settlement concludes the FTC’s three-year investigation and puts this matter behind the Company, which, as always, will continue its ongoing efforts to better serve its customers and improve its processes.”
The FTC says the company hid certain fees — such as those for smart home technology, air filters and Internet packages — that may have added more than $1,700 a year to rental costs. Tenants learned about the fees only after receiving or signing their leases, and after paying an application fee of up to $55 and a reservation fee of up to $500.
Invitation Homes also promised “quality assurance inspections” and “24/7 emergency repairs.” But residents in more than 33,000 homes submitted at least one work order, including plumbing problems and electrical issues, within the first week of moving in, according to the FTC complaint. Invitation owns or manages more than 100,000 homes.
The agency also alleges that the company systematically withheld tenants’ deposits in exchange for general wear and tear damages. According to the FTC, in some states, the company charges tenants for all necessary repairs to the unit and revises the charges only when residents object to them. This resulted in a return of only 39.2% of total consumer savings collected between 2020 and 2022, compared to a national average of 63.9%.
The FTC also alleges that, during the COVID-19 pandemic, Invitation Homes exempted its tenants from filing a declaration required by the Centers for Disease Control and Prevention (CDC) to prevent them from being expelled during the suspension of the country.
As part of the proposed settlement, the company is required to disclose lease payments and handle security deposit refunds properly. The settlement must be approved by a federal judge before it can take effect.
Editor’s note: This story has been updated with a statement from Invitation Homes.
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