Nearly 70% of U.S. households own a pet, according to the AAPA, making the odds pretty good that, at one point or another, a landlord will have a potential tenant with a pet. There are several ways to structure a pet deposit to protect the landlord and rental property and attract good tenants.
In this article, we’ll discuss the difference between a pet deposit and a pet fee, offer some insights on how much more rent a pet-friendly home can earn, along with tips for making a rental property ready for pets.
- A pet deposit is similar to a refundable tenant security deposit, although the total deposit amount may be capped by local landlord-tenant laws.
- A pet fee is a one-time charge, while pet rent is an extra recurring monthly fee charged to a tenant with a pet.
- Federal and state fair housing laws may prohibit a landlord from charging a tenant with a service or emotional support animal extra rent.
- Creating a standard pet policy, requiring a tenant to obtain renters insurance, and interviewing a pet are some of the ways to make a rental property pet friendly.
What to consider before asking for a pet deposit
While there are numerous advantages to having a pet-friendly rental, there are a couple of things a landlord should do before asking a tenant for a pet deposit.
First, make sure that it’s legal to collect a pet deposit. Second, consider whether collecting a pet-specific deposit provides the best landlord protection.
Local and state landlord-tenant laws in some areas may limit the total security deposit, regardless of what the deposit is for, such as cleaning or excess damage caused by a tenant. As the legal resource website Nolo.com points out, some states limit the total deposit to an amount equal to one or 2 months of rent, while other states specifically allow an additional pet deposit, often limited to a certain amount.
Some states also prohibit a landlord from using a tenant security deposit to pay for damages caused by a pet, while other states don’t allow a pet deposit to be used for damage caused by a tenant.
For example, if the pet was well-behaved but the tenant wasn’t, the deposit for the pet could not be used to pay for excess tenant damage.
How to charge for pets
There are 3 ways to charge for pets: Pet deposit, pet fee, and pet rent. In some cases, a landlord may wish to combine 2 methods, such as collecting a pet deposit and charging a monthly pet rent.
As the name suggests, a pet deposit is similar to a refundable tenant deposit. According to this post from Zillow, pet deposits typically range from a flat fee of $200 to $500, while some cities, such as Seattle, limit the deposit amount to 25% of one month’s rent.
Before collecting a deposit, a landlord should make sure that the total deposit amount required for both a tenant and a pet is competitive compared to other pet-friendly rentals and that the amount is allowed by landlord-tenant laws.
Good ways to learn what other landlords are charging for pets include speaking with a real estate agent or property management company or contacting people with homes available to rent to learn what their pet policies are.
A pet fee is a nonrefundable amount collected from a tenant with a pet to pay for any potential pet-related damages. Some advantages to collecting a pet fee include extra immediate income to a landlord, fewer legal restrictions, and the ability to retain the fee even if there is no damage caused by a pet.
There also are potential disadvantages to collecting a pet fee.
Tenants with a well-behaved pet may object to paying a nonrefundable fee versus a deposit. In addition, a pet fee may not provide enough funds to pay for pet-related damages. Also, if a tenant knows the fee won’t be returned, there may be less of an incentive to a tenant to make sure a pet doesn’t cause damage.
Unlike a pet deposit or fee, pet rent can be a good way of generating additional recurring income for a landlord. The extra amount of pet rent may vary based on factors such as the type and size of the pet and the number of pets.
According to Zumper, a data research and rental listing website, pet-friendly homes can be rented out for between 20% to 30% more on average than a property that doesn’t allow pets.
To remain competitive in the marketplace, a landlord may wish to run rent comparables of properties with pets and break out the pet rent from the normal monthly rent. That way, a tenant without a pet won’t be discouraged from renting a home because the rent appears to be too high.
When is a landlord prohibited from charging for pets?
There are situations in which a landlord is not allowed to charge a pet rent, deposit, or fee. Federal fair housing laws such as the Americans with Disabilities Act (ADA) and the Fair Housing Act (FHA), along with statutes in some states, prohibit a landlord from charging a tenant extra if a pet is a service or emotional support animal (ESA).
However, a tenant with an emotional support or service animal will still be liable if the pet causes damage to the property beyond normal wear and tear. To better understand the laws relating to tenants with disabilities who depend on a service animal or ESA, a landlord may wish to consult with a local real estate attorney or property management company.
More information can be found by visiting:
- Service Animals and the ADA from the Civil Rights Division of the U.S. Department of Justice
- Assessing a Person’s Request to Have an Animal Under the Fair Housing Act from the Department of Housing and Urban Development (HUD)
5 tips for making a rental property pet-friendly
A pet-friendly rental can generate more monthly income, attract a bigger pool of potential tenants, and reduce tenant turnover because landlords who accept pets can sometimes be difficult to find.
Here are 5 tips to follow to attract better tenants while minimizing potential problems of renting to a tenant with pets.
1. Create a pet policy
A pet policy specifically identifies what types of pets are and are not allowed. For example:
- Types of pets allowed or not allowed can be outlined, such as dogs, cats, hamsters, fish, snakes, and tarantulas.
- Potentially dangerous breeds, such as pit bulls and Rottweilers, may be prohibited.
- Weight limits may apply, such as dogs weighing 30 pounds or less.
- A rule limiting only pets owned by tenants can be enacted to prevent tenants from pet-sitting for extended periods of time.
2. “Interview” each pet
A pet policy may also include the requirement that a landlord must personally meet each pet. Questions to ask and things to look for when vetting a pet include:
- Does the pet follow basic commands?
- How long has the tenant had the pet?
- Who will take care of the pet when the tenant is at work or away?
- Has the tenant received any previous complaints about the pet?
3. Ask for pet paperwork
Pet-related paperwork may include proof that a pet is up to date on vaccinations, properly licensed, and always wears a collar or has been microchipped. Request copies of license receipts and vaccination records, such as a copy of the bill from the vet, to store in the tenant’s file.
4. Require renters insurance
A landlord also may wish to require a tenant to obtain renters insurance that includes a rider for pets, provided the local and state landlord-tenant laws allow it. The policy should cover damage caused by a pet and include extra liability coverage for both the tenant and landlord if a dog attacks a neighbor or guest.
5. Add a pet addendum
A pet addendum may be added to a new lease or used to modify an existing lease if a landlord allows a current tenant to get a pet. Resources for obtaining a lease pet addendum include a local real estate attorney or property manager and online sources such as the Humane Society of the United States, eForms, Legal Templates, or Zillow Rental Manager.
Once the decision has been made to accept pets, the next step is to determine whether to charge a nonrefundable pet fee, collect a pet deposit, or add a monthly pet rent. The extra cash flow will drop straight to the bottom line and also may attract more qualified tenants who don’t mind paying a little bit more for a pet-friendly rental.