Intro to Rental Property Licensing in Philadelphia

Philly landlords stand to generate a substantial profit. Yet, there’s more to becoming a landlord than simply buying a property and collecting rent. There’s red tape and many potential regulatory landmines.

GM Holdings is an expert in rentals in Philadelphia. Thus, we know the ins and outs of property licensing and will explore the topic below:

Understanding Rental Property Licensing

Any landlord or property owner looking to rent in Philadelphia must acquire a rental license to rent to tenants. A separate rental license is necessary for each building of owners/landlords with multiple buildings [1]. 

The Department of Licenses and Inspections (L&I) doles out these licenses. 

It’s a code violation to rent without a license in Philadelphia. Thus, anyone who does so will be subject to a $300 daily fine. Provided a relevant party gets wind of rental properties operating without licenses, that number can pile up fast if it happens daily (potentially on multiple properties) [2].

Here’s one consequence of lacking a license: You need one to legally evict a tenant who isn’t keeping up with rent. 

Philadelphia's Rental Property Licensing Requirements

Before receiving your Philadelphia rental property license requirements, you’ll need a Business Privilege License. Note that these licenses are handed out per owner name. Thus, if you own a property as a corporation and another individually, each requires a license. 

In shared properties, all owners need a Commercial Activity License. These are free [3]. However, if you put it on hold, you must reactivate it.

You’ll also require a Philadelphia Certificate of Rental Suitability sixty days before the Lease Start Date [4]. 

A Limited Lodging Operator License is also required for limited lodging. A rental housing license isn’t needed in these instances [5]. 

Additionally, units being occupied by family members don’t require licensing. What they do need, however, is a Non-Rental Affidavit [6]. 

A Business Income and Receipts Tax ID (BIRT) is another requirement.

The Application Process

Here’s a step-by-step breakdown of what you’ll need to apply for a Philly housing rental license [7]: 

• Obtain your Philly Business Tax Acct Number and Commercial Activity License.
• Ensure you have the property's Certificate of Occupancy and zoning approval. Lacking these permits will prevent you from getting your license for the property.
• Confirm that your property doesn’t have any outstanding violations. You won’t receive your license if there are any. 
• Pay any outstanding property taxes owed to The City of Philadelphia.
• Any properties built before 1978 with a child under six will require that you perform due diligence to ensure the property is lead-safe or lead-free. You must provide tenants with specific materials and statements in these instances. 
• You’ll need to fill out the application form. Click here to learn how to fill it out.

You’ll also require the following ownership information:

• 
  New owners require a recorded deed or settlement sheet signed by the seller and buyer as proof of ownership. An agreement of sale or a receipt of sheriff’s sale won’t be accepted.
• Those outside of Philadelphia seeking a rental property license need a managing agent with a Philly mailing address to put on the application. The agent interfaces with L&I. This scenario necessitates the license application be submitted under the property owner’s commercial property license. The property owner will be legally responsible for the license, as they’ll be listed as the license holder.
• Company-owned property landlords must provide the mailing address and name of anyone with over 49% property ownership interest or the two people with the most interest.

Apply online through the eCLIPSE platform, which should only take five business days to process.

Maintaining Compliance

You must comply with all state, local, and federal regulations, including [8]:

• 
  Security deposit laws.
• Fair housing laws.
• Eviction laws.

It’s expected that rental properties are safe and habitable. For instance, fire protection and smoke detectors should be functioning optimally and tested. Your property must be well-maintained through each lease period. 

Note that all tenants can bring attention to livability issues by calling the L&I’s inspection line at 311 [9]. A call can also be placed by dissatisfied tenants to the Public Housing Agency. 

Code violations result in daily $300 fines.

One of the best ways to ensure a good relationship with inspectors and licensing bodies is by fostering a good relationship with tenants and ensuring they have no reason to call 311. This means meeting their needs and providing prompt repairs when necessary. You should inspect the property to ensure the space is in good shape up to three times yearly.

Updates And Changes To Regulations

Changes in Philly-based rental licensing have occurred in short-term rentals like Airbnb and VRBO [10].

More rigorous practices are being implemented as the Soccer World Cup is coming to the City Of Brotherly Love. New licensing and zoning permits are now required for these short-term rentals. Previously, these short-term rental properties weren’t regulated. 

This more rigorous enforcement stemmed from such properties being left in disrepair and causing issues for neighbors.

Benefits of Professional Property Management

Rental licensing and its many facets present many challenges for landlords and owners. It’s additional legwork that calls for much due diligence and extra resources.

However, staying on top of licensing and regulatory needs is integral to maintaining good relationships with regulatory authorities and tenants. It will ensure you don’t run into legal and financial snafus that could derail your business.

You could streamline these processes with a property management company like GM Holdings. We handle these nuts and bolts issues seamlessly for clients like you while you can focus on bolstering your bottom line.

Visit our web page to check out our client testimonials! You’ll see how the people who work with us appreciate our commitment to 100% client satisfaction. 

Conclusion

Rental property licensing is integral to remaining above board and ensuring optimal relations between tenants and landlords. Failing to have the appropriate licensing and ignoring compliance can cause regulatory issues that lead to financial damages while sullying your business reputation.

Learn more about the inner workings of rental licensing by contacting GM Holdings today at (215) 425-4475 or through our website.

Also, check out The City Of Philadelphia Rental License web page for more information.

(Disclaimer: We are not providing professional legal advice, and all the laws discussed are subject to change as of the writing of this guide.)

Sources:

1. https://www.phila.gov/services/permits-violations-licenses/get-a-license/business-licenses/rental-and-property/get-a-rental-license/#:~:text=You%20need%20a%20Rental%20License,Licenses%20and%20Inspections%20(L%26I). 
2. https://www.pewtrusts.org/en/research-and-analysis/reports/2021/11/rental-code-enforcement-in-philadelphia#:~:text=In%20Philadelphia%2C%20failure%20to%20have,about%20conditions%20at%20the%20property. 
3. https://www.phila.gov/services/permits-violations-licenses/get-a-license/business-licenses/activity/get-a-commercial-activity-license/#:~:text=There%20is%20no%20cost%20for%20a%20Commercial%20Activity%20License. 
4. https://www.phila.gov/services/permits-violations-licenses/get-a-certificate/get-a-certificate-of-rental-suitability/ 
5. https://www.phila.gov/documents/real-estate-and-property-business-license-materials/#affidavit-of-non-rental 
6. https://www.phila.gov/services/payments-assistance-taxes/taxes/business-taxes/business-taxes-by-type/business-income-receipts-tax-birt/ 
7. https://philadelphiazoning.com/2017/10/how-to-get-housing-rental-license-philadelphia/ 
8. https://www.tcsmgt.com/regulatory-compliance-what-is-required-of-every-philadelphia-rental-property-owner/#:~:text=18%2C%202022%20TCSMgmt-,Regulatory%20Compliance%3A%20What%20is%20Required%20of%20Every%20Philadelphia%20Rental%20Property,home%20that's%20habitable%20and%20safe. 
9. https://phillytenant.org/repairs/#:~:text=2.-,Request%20an%20Inspection,also%20ask%20PHA%20to%20inspect. 
10. https://whyy.org/articles/short-term-rental-philadelphia-regulations/