Solutions to the problem of unlicensed rental units

Posted by on March 31, 2012
Philadelphia City Hall

Philadelphia City Hall (Photo credit: Wikipedia)

We have a lot of regulations applying to rental properties in Philadelphia, but the enforcement of them is very lax.  This creates a situation where rule-abiding landlords are put at a significant competitive disadvantage, as I’ve explained in this post.

I’m not advocating a huge witch hunt for unlicensed landlords.  Seventy-five percent (75%) of rental properties in Philly are unlicensed.  Any rapid punitive measures would probably do more harm than good.  In many cases, landlords aren’t aware of all the various things that they are required to do to legally operate a rental property in Philadelphia.  After all, it’s a pretty long list, and to my knowledge the city has never published a guide for landlords.

I do believe, however, that we should gradually and gently educate investment property owners and bring them into compliance.  Owners should not be allowed to go 5 or 10 years without paying property tax.  Landlords should get a license and pay BPT/NPT.  Owners of multiunit buildings with incorrect usage should correct it.

The process of finding unlicensed landlords may seem daunting and expensive, but I believe that there are some practical ways to accomplish the task:

1)      BRT.  The BRT database contains mailing addresses for all Philadelphia properties.  This is what BRT uses for sending tax bills, etc.  I suggest generating a list of all properties where the mailing address and property address are different.  This will mostly be landlords who should have a rental license, or vacant investment properties that should have a vacant property license.  There will also be other situations such as an owner allowing relatives to stay in their property.

I would suggest that the city first send a letter to the mailing address (owner’s address) that contains a concise and readable list of steps that you are required to take to be a landlord in Philadelphia.  This will help landlords who aren’t aware of the rules to become compliant.

As a follow-up, possibly 6 months to a year later, the city could send a letter to the property notifying the tenant that if they are renting, their landlord is required to have a license.  The city should also make a webpage where tenants can look up the rental license by address, and submit their property if it is being rented without one.  The city could then follow up with a warning letter to the property owner.

2)      PGW (suggestion from Jim Sims, HAPCO).  On a similar note, PGW should be able to cross-reference their data with BRT to identify properties where the gas bill is in a different name than the property owner.   This will be the case in the majority of rental properties, and also a good number of non-rental properties.  As suggested in the previous paragraph, a letter could be sent to the tenants encouraging them to check that their property is a legal rental.

3)      Craigslist.  Several local Philly startup tech companies are already parsing all craigslist rental advertisement posts.  I’m sure one of them would be happy to adapt their system for the city.  For each rental advertisement posted with a Philadelphia address, cross-reference that address with the database of rental licenses, and if it’s not there send a letter to the owner listing the requirements to be a landlord in Philly.

4)      Title companies.  Require title companies to ensure proper usage on the transfer of a multiunit property.  If title insurers can have claims submitted against them for transacting a multiunit property with improper usage, we will see the transfer of illegal multi-units end very quickly.

5)      Evictions.  You’re required to have a rental license to evict a tenant, but there’s no penalty for getting the rental license immediately before the hearing.  It defeats the purpose of the law.  I suggest charging a $1000 court fee to any landlord who evicts someone and does not have a rental license spanning at least the last 6 months (assuming the tenant has been there that long).

I believe that implementing any of these suggestions would improve the state of rental housing in Philadelphia.  Are these too harsh?  Not harsh enough?  Let me know your thoughts in the comments.


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