Philly is covering renters’ up-front rental expenses as Council members consider bills to reduce and spread out costs
The Office of Homeless Services and PHDC have launched a pilot program to cover 3 months’ rent and moving expenses for eligible renters.
One of the biggest hurdles renters face when it’s time to move is paying up-front costs of a couple months’ rent and a security deposit for their new home.
A new Philadelphia program, FreshStartPHL, is covering the equivalent of three months’ rent for eligible renters and giving them up to $1,000 for moving expenses.
The pilot program is a collaboration between the city’s Office of Homeless Services and the Philadelphia Housing Development Corp.
PHDC estimates that between 2,500 and 2,600 households will be able to use the program to get into a rental home with the roughly $18 million the city has remaining in pandemic-era federal Emergency Rental Assistance program funds.
Almost half of Philadelphians rent their homes. And the Philadelphia metropolitan area is one of the least affordable major metros for its apartment renters based on their incomes.
Many households that find rents they can make work don’t have enough money saved to comfortably afford the large lump-sum payments they need. It’s a challenge PHDC hears about all the time, said Ayanna Sims, program manager for PHDC’s rental assistance programs.
» READ MORE: Philly is one of the least affordable major metros for its renters
“People will scramble and gather this money, and as a result, folks often move in, [and] they don’t even have grocery money,” she said. “They’re waiting for a couple weeks before they can, you know, turn on the power, or get the internet that they need for their kids’ homework.”
Renters will receive assistance through FreshStartPHL on a first-come, first-served basis. PHDC sent out a public announcement about the program Thursday afternoon. By 8 a.m. Friday, more than 1,000 emails had come in from applicants, Sims said.
According to U.S. Treasury Department guidelines for the funds, eligible renters can make up to 80% of the area median income, or about $83,000 per year for a household of three. Priority is given to renters who make up to 50% of the area median income, or about $52,000 annually for a household of three.
FreshStartPHL also is working with Philadelphia’s Eviction Diversion Program to provide funds for renters who need to move out.
When renters apply, they must have already identified a home they want to rent and must share the landlord’s contact information. The landlord must have all the city’s required certifications.
Landlords have been receiving funds within two weeks, Sims said.
Lawmakers considering new laws on up-front rental costs
On Monday, tenant advocates, renters, and rental property owners spoke at a City Council hearing on legislation also meant to help renters with the up-front costs of moving into a home. The bills would cap rental application fees at $20 and allow renters to spread out security deposit payments across four months instead of paying before they move in.
Councilmember Rue Landau, a housing attorney who sits on PHDC’s board, introduced the bills, which she called “a critical step toward lowering the barriers to affordable housing by making up-front costs more manageable for the average Philadelphian.”
John Mondlak, chief of staff in the city’s Department of Planning and Development, said the city supports the intent of the bills but is concerned about unintended consequences.
“For example, a landlord who receives a security deposit piecemeal over the course of four months is assuming more risk than a landlord who receives the full security deposit up front,” he said. This could dissuade landlords from renting to households “that are, or seem to be, likely to request or need an installment plan.”
Mondlak pointed out that the city relies on small landlords to provide affordable rental housing to city residents.
“Given the supply of affordable rentals is already too low, we must act with caution when considering legal measures that on their own or in combination with other laws, disproportionately affect small landlords,” he said.
Mondlak’s concerns about unintended consequences were echoed by individual landlords and representatives of HAPCO Philadelphia, the city’s largest association of rental property owners; the Pennsylvania Apartment Association; and the Building Industry Association of Philadelphia.
Landlords said measures that raise their costs ultimately result in higher rents or landlords leaving the business, resulting in fewer available rental homes.
Rental property owners said that application fees are not a source of profit and that the cost of running background and credit checks is more than the legislation’s $20 cap. So owners would be on the hook for the remaining money.
Landlords said lump-sum security deposits paid up front help protect them from potential financial harm and the possibility that renters will move in, never pay rent or the full security deposit amount, and not take care of properties. They said that doing away with lump-sum payments will result in stricter screening standards for tenants.
Council’s housing committee held the bills for further consideration instead of passing them along to the full Council for votes.