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The rental landscape in Illinois is facing its most significant shakeup in over a decade. New legislation currently under consideration at the state level could fundamentally change how landlords across Illinois, yes, even outside of Chicago, manage their rental properties.
This blog is not just another policy update. It’s the real-world break down of how these potential changes affect your day-to-day operations as a landlord. You’ll also hear what conversations are happening right now among property managers like myself, attorneys, local officials, and investors.
If you own or manage rental property in Illinois, this isn’t a "Chicago thing." This is your issue now.
What’s on the Table: The Three Core Proposals
The proposed legislation includes three major changes:
Application Fee Cap: Limits application fees to no more than $20.
Ban on Non-Refundable Move-In Fees: Makes all non-refundable move-in fees illegal.
Flat Cap on Late Fees: Limits late rent penalties to a small fixed dollar amount (e.g., $10-$15).
Each of these measures may seem tenant-friendly on the surface, but like many housing laws, the unintended consequences could end up hurting renters just as much as landlords.
Why This Bill Has Landlords on Edge
This isn’t just about paperwork or semantics. These changes could:
Undermine tenant screening systems
Force landlords to take on more financial risk
Shift costs back into rent pricing
Create operational challenges that small landlords may not be equipped to handle
And all of this is happening at the state level, which means it will affect every city and county in Illinois—not just Chicago or Cook County.
Let’s Talk About Application Fees
We spend upwards of $60 per applicant to run background checks, credit reports, and verify income. If fees are capped at $20, landlords will either:
Eat the cost
Cut out vital parts of the screening process
Or become more risk-averse by relying heavily on income-to-rent ratios alone
Translation? More denials. Fewer approvals. The very tenants this legislation aims to protect could find it even harder to get approved.
The Problem With Banning Non-Refundable Move-In Fees
Move-in fees became the norm in Chicago because of the penalties tied to mismanaging security deposits. We’re talking about $10,000 lawsuits over clerical errors or interest miscalculations.
The industry moved toward move-in fees to lower the risk for landlords and reduce the financial barrier for tenants. Ironically, banning them might push landlords back to collecting large security deposits.
And what does that do? Makes it harder for tenants to move. Higher upfront costs. More friction. Fewer housing options.
Late Fee Limitations: Is It Really That Helpful?
Late fees exist to keep tenants accountable. Most landlords don’t rely on them for profit—they’re a behavioral tool.
If capped too low, tenants have less urgency to pay on time. This strains landlord cash flow, especially for smaller owners with mortgages, maintenance, and taxes due.
And here’s the kicker: when you lose $50/month in late fees, you're going to want to make that up somewhere else. Usually in base rent.
Who Are Illinois Landlords, Really?
There’s a growing misconception—pushed by media and policymakers—that landlords are all corporations or hedge funds.
In reality? Most of my clients have:
One or two buildings
Full-time jobs elsewhere
Became landlords by accident (inherited property, couldn’t sell, etc.)
These are your neighbors. They’re not sitting on yachts counting passive income.
The Real Problem: Policy Without Balance
These proposals don’t fix core issues. They attempt to eliminate symptoms of existing policy failures:
Move-in fees arose because security deposit laws are too risky.
Late fees are needed because the eviction process is too slow.
Higher app fees exist because fake paystubs and fraud are rampant.
Rather than solving the root causes, lawmakers are adding more layers to an already broken system.
Security Deposits: A Lawsuit Waiting to Happen
In Chicago, making one small mistake on a deposit—say, missing interest by a few cents or sending notice one day late—can cost you triple damages plus legal fees.
This is why landlords went to move-in fees in the first place. If the city or state really wants to eliminate those, they need to fix the laws around security deposits first.
Even Cook County’s RTLO allows landlords a "right to cure." That small flexibility has helped owners feel more secure using deposits again.
How These Laws Lead to Rent Increases
Let’s be honest: when costs go up, they get passed on to tenants.
Ban move-in fees? Raise the rent to recoup that risk.
Cap application fees? Screen less or tighten qualifications.
Limit late fees? Add buffer costs into lease pricing.
These are basic business adjustments, not acts of malice. But they all lead to the same outcome: housing gets more expensive.
The Voices Missing From the Table
There’s another layer to this problem—landlords are not being heard.
Politicians are listening to tenant advocacy groups, but not the small landlords managing duplexes in South Shore or inherited two-flats in Berwyn.
When lawmakers picture "landlords," they imagine private equity firms. Not a family trying to cover their mortgage.
Until those real stories are told, the policy will remain one-sided.
Crime-Free Housing: The Overlooked Impact
Crime-free housing ordinances have good intentions—to create safer rental communities. But they’ve also been used to evict victims of domestic violence or those calling 911.
Both landlords and tenants agree: reform is needed. But it moves slowly through the legislature, while new restrictions on landlords advance quickly.
Again, this shows the disconnect between legislative priorities and ground-level realities.
HVAC Regulations: The Hidden Cost Bomb
New environmental standards are banning certain A/C refrigerants and requiring furnace/coil system changes. The result?
You can no longer just replace your AC unit—you may need a new furnace too.
What used to be a $3,000 repair could now be $7,000-$10,000.
And when landlords face $10K costs unexpectedly? They raise rent to cover it.
Maintenance and Tenant Experience
We’ve always promoted preventive maintenance—furnace checks in fall, AC servicing in spring.
The data is clear: when owners maintain systems regularly, breakdowns go down, tenant satisfaction goes up, and costs stay lower over time.
But new regulations often add to these costs, and without incentives or relief, landlords are left to absorb it all—or again, pass it on to the tenant.
Screening & Fraud Prevention: A Growing Challenge
Fake paystubs and fraudulent documents are up dramatically. We reject one out of three applications for fraud alone.
If screening costs are capped, we may no longer be able to verify:
Rental history
Employment
Payment behavior
Instead, we may rely only on debt-to-income ratios, leading to stricter standards and fewer approvals.
Again, an unintended consequence that could hurt tenants more.
Data That Matters: Move-Out to Move-In Timing
We track how long it takes from one tenant moving out to the next one moving in.
The worst delays? Section 8 out to Section 8 in.
Move-outs are unpredictable
Inspections can delay turns
Paperwork bottlenecks are common
Delays cost landlords real money. And if policies don’t account for these timelines, they end up punishing good actors trying to do it right.
What Landlords Can Do
You can’t control the legislature, but you can:
Join local housing groups (like NBOA) to stay informed
Contact your reps when votes like these come up
Educate tenants and officials about real landlord challenges
Track your data (turn times, application rejection rates, etc.) so you have proof when advocating
Final Thoughts
These proposals may sound simple, but the implications are massive. For many landlords, especially small ones, they add up to real cost and risk. And for tenants? They could face stricter standards, fewer approvals, and higher rent.
We need a policy that’s balanced, not just reactive. That starts with getting the right people in the room—those who actually manage housing, not just theorize about it.
Let’s focus on root causes, not surface-level symptoms. And let’s build a housing system that works for both tenants and landlords.
This is a lot of information you need to know if you plan to invest here in the Chicago market, and it may seem overwhelming but real estate investing in Chicago is a team sport. Who is on your real estate investing team? Do you have a team? GC Realty & Development has a team of resources and we are willing to share all of our 20+ years of experience in both real estate investing and Property Management in the Chicago market. We will do this whether you hire us or not.
What gets me up in the morning and keeps me going 12+ hours a day of work is the ability to add value to Chicago real estate investors. If we connect you will hear me say our goal of our company is to add value to everyone we come in contact with and in return we hope one day you will hire us for our Tenant Placement or Property Management Services, refer us to someone you know that needs Tenant Placement or Property Management Services, or will leave us a 5 Star Google review. We love to get all 3 from current and aspiring investors we get the opportunity to help!
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