Philadelphia City Council recently took significant action on housing, passing two critical bills aimed at changing the rental landscape for both tenants and landlords.
The new legislation, approved on June 12, awaits final action from Mayor Cherelle Parker, who will have 10 days to sign it, veto it, or allow it to become law without her signature.
Under the proposed law, one of the most notable changes for renters concerns security deposits.
Currently, state law in Pennsylvania prevents landlords from charging more than two months’ worth of security deposit for a tenant’s first year, and only one month’s deposit can be charged during the second year.
However, the new city law mandates that landlords with three or more rental units who charge more than one month’s security deposit must allow tenants the option to pay that deposit in three equal installments.
In Philadelphia, many landlords traditionally charge three months’ rent upfront—interpreted as first, last, and security deposit—but this practice is misleading as the ‘last month’s rent’ is categorized under the security deposit according to Pennsylvania law.
For example, a typical rental cost of $1,500 per month could require a tenant to pay $4,500 upfront before move-in.
But with the changes, landlords can now only charge $3,000 upfront, then allow the remaining $1,500 to be paid in three monthly installments.
Thus, instead of a one-time payment, renters would stagger payments as follows: $3,000 in the first month, $500 for each of the next three months.
This ultimately aims to lessen the financial burden on low-income renters and make moving into new homes more feasible.
Alongside security deposit reforms, another provision within the new legislation addresses rental application fees.
Going forward, landlords will be limited to charging no more than $50 for application fees for prospective tenants.
If the actual cost to process an application is lower than $50, landlords can only charge prospective tenants the exact amount of that cost.
It is also important to note that these proposed changes will only apply to new rental contracts moving forward, thereby excluding any existing leases from retroactive enforcement.
If the law is enacted, it would take effect 90 days after passage.
Tenants who believe their rights under the new law have been violated can seek legal recourse by hiring an attorney to file grievances against their landlords, potentially seeking damages in court.
To initiate enforcement, tenants will need to file complaints with the Philadelphia Fair Housing Commission.
While security deposits and application fees are now regulated, the proposed law does not address other potential move-in costs like non-refundable pet fees or pet rent, which could still pose financial challenges for renters with pets.
These legislative efforts are expected to impact a significant portion of the population in Philadelphia.
According to data gathered by The Pew Charitable Trusts, nearly 48% of Philadelphia households rented between 2018 and 2022.
The city hosts about 55,000 landlords, with approximately 60% being city residents, while 20% reside elsewhere in Pennsylvania and another 20% are from out of state.
Notably, about 73% of these landlords are classified as small landlords, defined as those operating two or fewer rental units, and thus they would be exempt from the security deposit installment requirement included in the bill.
Meanwhile, around 25% of landlords own between three to 24 units.
The legislative push for these changes stemmed from Councilmember Rue Landau, who has a background in housing law and highlighted the need for affordable housing solutions.
In comments made following the bill’s passage, Landau emphasized that the installments will alleviate stress for low-income renters desperate to secure housing.
“Many times tenants are scraping together every single cent they can, including borrowing from places and skipping other bills,” she remarked.
Landau pointed out that wages have not kept pace with rising rental costs, necessitating measures that ease the financial strain on tenants and prevent them from living in unsafe or inadequate housing conditions.
The measure received strong support within the council, passing with a vote of 13-3, thanks to the backing of several councilmembers, including Jamie Gauthier, Curtis Jones, Kendra Brooks, Nicholas O’Rourke, Mike Driscoll, and Mark Squilla.
Opposition to the bill came from Councilmembers Anthony Phillips, Jeffery Young Jr., and Jim Harrity.
With the council’s supermajority enabling them to override a potential veto by the mayor, the future of these housing laws appears poised for implementation.
This legislative process underscores the intricacies involved in altering housing laws in Philadelphia, where public input is solicited at various stages, including committee hearings aimed at gathering community feedback.
Once a bill is introduced, it undergoes a series of readings and committee recommendations before being voted on by the full council, culminating in the mayor’s role in either enacting or vetoing the legislation.
image source from：https://whyy.org/articles/philadelphia-security-deposit-renter-landlord-law/
