Thinking about renting out a residential property to bring in some extra income? In Philadelphia, you’ll probably need a rental license. If you have been renting residential properties for years, you probably know this. But if you’re a newbie, you’ll have to factor the renewal process into your annual administrative tasks, or face a $300 daily fine. It is worth noting that rental license requirements are subject to change. Even if you’re an experienced real estate entrepreneur, it helps to review the requirements every once in a while to make sure you’re not paying for something you don’t need. So, here’s what every residential landlord needs to know about Philadelphia’s rental license renewal regulations.
Who needs a Rental License
First things first. Does the law require you to have a rental license? Laws are always subject to change. Even if you may have been required to obtain a rental license in past years, you may find that your property falls under a different license at this point.
The two most common situations where an income property is not going to be subject to Philadelphia’s rental license renewal process.
- A unit is being occupied by a family member and no rent is collected. However, an Affidavit of Non-rental must be notarized and delivered to L&I.
- A unit that is used as limited lodging. Limited lodging is when a unit is being rented for short periods of time (i.e. Airbnb). Limited Lodging requires a Limited Operator License.
For the most part, units that don’t fall under these exceptions will need to have a Philadelphia rental license.
How to obtain or renew a Philadelphia rental license
Obtaining or renewing a rental license is not as challenging as it might seem. You just need to know the process and be prepared to provide the information that the city is looking for. You can apply for or renew your rental license in Philadelphia online using eCLIPSE. Fortunately, there is a step-by-step guide for renewing your license using eCLIPSE. Those that need help completing the online application can schedule a virtual appointment using the Qless platform.
If you’re not comfortable applying or renewing online, you can apply or renew in person. However, you need to schedule an appointment. You can schedule your appointment by dialing 311 if you’re in Philadelphia, or (215)-686-8686 if you’re outside the city. The appointment would take place at the Municipal Services Building.
Before you apply…
It’s important to note that before you apply for or renew your rental license, you must:
- Be up to date on all City of Philadelphia taxes
- Have no outstanding L&I violations
- Have a valid email address
- Follow rules related to Lead Safety.
- Have no outstanding L&I violations
Here are some other things you should know about Philadelphia rental license renewal
Common Misconception: “If I buy an investment property and the previous owner has a rental license, I should be fine.” Not necessarily; if you buy a property and the previous owner has a rental license, you still have to apply for a new one in your name. Rental licenses are not transferable.
The Renewal Cost: If you’re considering buying an investment property, it’s important to consider the renewal cost each year. The fee per unit is $56 and $165 for vacant property or lot, and the maximum fee is $22,770.
Renewal Late Fee: If you renew your license for more than 60 days after the due date, L&I will charge 1.5% of the fee for each month since the license expires. Click here for the payment methods and details.
What if I don’t renew my Philadelphia rental license?
If you’re reading and thinking ‘this sounds like a lot, you’re not alone! Many other residential landlords apparently feel the same way. Over 40,000 residential rental units in Philadelphia are unlicensed. However, knowing the consequences of not having a rental license in Philadelphia is important. Here’s what can happen if you violate the cities rental license ordinance:
- The tenant can withhold rent
- You are prohibited from filing for eviction
- Courts do not grant back payment of rent for periods where the unit was not properly licensed
- You will be subject to fines and the consequences of not paying taxes on rental income.
Need help? That’s why we’re here!
If you’re not sure whether you need to obtain a rental license or you need help navigating the process, MZA Legal is here. We help entrepreneurs avoid mistakes and take advantage of new opportunities by making sure their business is build on a solid foundation. And we can help you with licensing issues. Give us a call, or drop us a line if you could use a hand. That’s what we’re here for.