What Philly renters and landlords need to know about changes to security deposits on track to become law

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Philadelphia City Council passed two key housing bills June 12, setting the stage for them to become law in the coming weeks and bringing potential changes for both renters and landlords. Here’s what you need to know.

What’s changing for security deposits for renters in Philadelphia?

Pennsylvania state law already prohibits landlords from charging more than two months’ security deposit for a tenant to move in for the first year. During the second year, landlords can only hold one month’s security deposit.

For any landlord in Philadelphia with three units or more who is charging more than one month’s security deposit prior to move-in, they must allow a tenant to pay some of that deposit in three equal installments under the proposed city law.

It’s common that Philadelphia landlords charge the equivalent of three months of rent before a tenant can move in, describing it as first, last and security. But under Pennsylvania law, that “last month’s rent” is actually considered part of the security deposit, not a separate payment.

Right now, for an apartment that costs $1,500 a month, a landlord can charge $4,500 to be paid before moving in.

Under the proposed law, landlords with three units or more can charge $3,000 to tenants before move-in. Then the remaining $1,500 balance is spread out over a three-month period. In total, renters would still owe $4,500 — but instead of paying it all at once, the cost would be staggered: $3,000 in the first month, $2,000 for each of the next three months and $1,500 in month four.

What’s changing for rental application fees in Philadelphia?

Under the proposed law, landlords in Philadelphia can charge no more than $50 for application fees for prospective tenants. If the cost for an application, typically to run a credit and background check, is less than $50, then the landlord can be reimbursed for the cost of such a service.

How would this new housing law be enforced in Philadelphia?

The proposed law would only apply to new rental lease contracts and would not be retroactive to any existing leases. If the bill becomes law, it would go into effect in 90 days.

Tenants would be able to hire an attorney to file a lawsuit against their landlord for violating the law and may seek damages in court. To enforce the law, tenants must file a complaint with the Philadelphia Fair Housing Commission.

What about move-in costs for renters with pets?

The proposed law does not regulate any other potential move-in costs such as nonrefundable pet fees or pet rent.

How many people will Philadelphia’s new housing laws around security deposits and application fees affect?

About 48% of Philadelphia households rented their homes between 2018 and 2022, according to U.S. Census Bureau data analyzed by The Pew Charitable Trusts.

There are an estimated 55,000 landlords across Philadelphia, according to Pew Charitable Trusts research. About 60% of landlords are city residents, 20% are located in Pennsylvania and 20% in other states.

But small landlords are exempt from the security deposit installment plan measure. Small landlords are defined as those who own and operate two or fewer rental units. About 73% of Philadelphia’s 55,000 landlords are considered small landlords.

About 25% of city landlords own and operate at least three but no more than 24 units.

Who is behind this proposed housing law change in Philadelphia?

The bill was sponsored by Councilmember Rue Landau, a housing law attorney by trade.

Landau said that paying security deposits in installments will ease the burden for low-income renters.

“Many times tenants are scraping together every single cent they can, including borrowing from places and skipping other bills,” she told WHYY News. “Wages have not kept up with the rising rents and that’s why we need to do everything we possibly can to make it easier for tenants to move in so they’re not stuck in properties that are in poor conditions or living in an unsafe living environment.”

City Council passed the bill June 12 with a 13-3 vote, advancing a measure backed by Councilmembers Jamie Gauthier, Curtis Jones, Kendra Brooks, Nicholas O’Rourke, Mike Driscoll and Mark Squilla. Councilmembers Anthony Phillips, Jeffery Young Jr. and Jim Harrity opposed the legislation.

The bill now awaits action from Mayor Cherelle Parker, who has 10 days to sign it, veto it or let it become law without her signature. If she issues a veto, City Council — having passed the measure with a supermajority — could override it and push the legislation forward.

How does a bill become law in Philadelphia City Council?

• The bill is introduced by a council member, added to the agenda, and referred to a committee.
• Members of the public are invited to speak about the bill during a committee hearing.
• A committee hearing is held and voted upon for recommendation or not.
• The bill is introduced into City Council with a committee recommendation for the first reading.
• The bill is reintroduced, sometimes with amendments, for a second reading.
• Members of the public are invited to speak about the bill before a vote is held.
• City Council members vote on the bill to pass it or not.
• The bill is then sent to the Mayor who has 10 days to either sign it, veto it or do nothing and let it become law if there was a supermajority vote. If a bill is vetoed by the mayor, it can be overridden by a supermajority of council.