Effective municipal rental regulation programs
No corner of our region is untouched by the challenge of effectively regulating and maintaining rental housing. Rental housing is a large and important component of the region’s overall housing stock. Accordingly, municipalities need model policies and tools to ensure that landlords in the community are responsible stewards of their properties. Fortunately, there are many tools that municipalities can employ to build relationships with landlords and ensure a healthy rental housing stock. A logical first step is to require registration of landlords, followed by creation of a performance-based licensing system. Performance-based ordinances will require that the municipality has a rental property information system in place to track landlord performance. Although licensing is not available to non-home rule municipalities, there are other strategies that can be put in place to effectively regulate nuisance rental properties. Municipalities can go a step further to foster positive relationships with the landlord community by offering incentives for compliance, coordinating landlord training programs and sharing information about resources to preserve properties. These strategies and additional resources are described in further detail below.
Registration and licensing*
A registration ordinance requires landlords to register their properties with the municipalities and provide contact information. A licensing ordinance requires registration and a regular health and safety inspection. It may also require other actions by the landlord and gives the municipality the power to revoke the landlord’s ability to conduct business within the municipality.
Rental property information system
Municipalities should maintain a database of registered/licensed rental properties in the community, including information about code compliance, police incidents, and tax/fee payment status. One of the greatest benefits of having a property information system is it gives the municipality a powerful tool for evaluating landlord performance, identifying problem buildings and landlords, and targeting resources to the problems.
Performance-based rental licensing
No municipality has unlimited resources. Performance-based rental programs effectively distinguish between those landlords that are responsible owners and managers, and those who are not, and focuses the greater part of the municipality’s efforts on the second group. A major advantage of the performance-based system is that it allows the municipality to focus its limited inspection resources. Thus, the municipality is not spending valuable time inspecting properties that are likely to be in good condition more often than necessary, and can devote its resources to the worst-performing properties. Municipalities can score properties based on the number of property code and nuisance violations, and require more inspections and higher fees for those properties with a negative score, while waiving fees and reducing inspection frequency for those properties that score well.
Manual of good landlord practice and training
Every existing landlord in each municipality, as well as every individual acquiring property in the municipality, should be given a manual that lays out the responsibilities of landlords and the standards of good landlord practice, both in general and with respect to the provisions of any applicable ordinance specific to that municipality. Training programs for landlords, which can include both basic courses and advanced or specialized courses in subjects such as equipment maintenance, legal issues, or financial management. The Community Investment Corporation already runs a property management training program for landlords and has published a Residential Property Management Procedures Manual.
There are many incentives that municipalities can offer landlords which cost the municipality little or nothing. These incentives can be bundled into a package that is made available to all participants that score well in a performance-based rental regulation program, for example: Regular (monthly or bi-monthly) forums between key municipal officials and landlords where both municipal and landlord concerns can be discussed informally and openly; fast-track approval of permits for property improvements; negotiated discounts on goods and services at local merchants or from local contractors.
Financing and preservation resources
Municipalities can help spread awareness of available financing resources to owners and managers of rental property in their community. The Community Investment Corporation (CIC) is a not-for-profit lender that provides financing to purchase, rehab, and refinance multifamily rental buildings in the six-county Chicago area, and provides reduced-interest loans for the Energy Savers Program. The Preservation Compact brings together leaders from a variety of disciplines and expertise to identify the most pressing affordable rental housing problems, devise solutions, and implement on-the-ground strategies that can assist developers, owners, tenants, government officials, and nonprofit organizations in ensuring safe, affordable housing far into the future.
- Drafting Rental Regulation Ordinances in Illinois Municipalities: A short guide for local officials
- Raising the bar: A short guide to landlord incentives and rental property regulation (includes information for both home rule and non-home rule municipalities)
- Community Investment Corporation (CIC) website
- CIC Residential Property Management Procedures Manual
- CIC Property Management Training Appendix and Toolkit
- The Preservation Compact website
*Illinois law distinguishes between "home rule" and "non-home rule" municipalities. A home-rule municipality can establish a landlord licensing system. A non-home rule municipality cannot adopt a licensing ordinance as such, however it can achieve much the same results by focusing on problem properties that run afoul of the municipality’s code. Please see Drafting Rental Regulation Ordinances in Illinois Municipalities: A short guide for local officials for more information on drafting a rental regulation ordinance in both home rule and non-home rule municipalities.