An Anti-Renter Ordinance

Good intentions. Bad outcomes.

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Last week, the Johnson Administration introduced an ordinance to City Council that would make substantial changes to the way leases are signed in Chicago. It’s a substantial piece of legislation that has the potential to dramatically reshape the city’s rental housing market.

Unfortunately, very few of those changes would be positive. By adding a slew of costs and penalties to rental agreements, the bill would make it a lot riskier to own rental units in Chicago – especially if you rent to vulnerable tenants. As a result, tenants will face fewer options, and tougher screening to get an apartment in the first place. And over time, Chicago will end up with less housing and higher rents.

But there’s a lot in this act, and it’s not all bad. So let’s break down the key components of the bill piece by piece.

What the PRO Act Does

The bill does five things:

1. Bans move-in fees and other junk fees, and reforms the city’s rules on security deposits to make them easier to collect and administer

2. Requires greater disclosure of who owns rental buildings, and sets up a rental registry to track units across the city

3. Permanently expands the city’s eviction counseling program, which provides lawyers to tenants facing eviction or non-renewal

4. Sets up a Bureau of Rental Housing Services to inform tenants and landlords of their rights, and mediate disputes

5. Requires landlords to offer a cause when they don’t renew a lease. If the tenant is not at fault (including for renovations, or if the landlord chooses to move back into the home), they must offer relocation payments to tenants worth 5-10 months rent (or $5,000-$10,000, whichever is greater).

Transparency is good and junk fees are bad

The most straightforwardly good thing the bill does is cap application fees at $20 and ban other ‘junk fees’ that don’t map directly to landlord costs. It pairs this with a reform to security deposits that makes it much easier for landlords to hold and collect. In tandem, this will eliminate high application or move-in fees, and likely bring back security deposits.

That means that when would-be tenants look at listings, they can more easily compare one cost number – the rent. And while security deposits are far from perfect, they reward tenants who care for units. That’s far better than a system of high-cost application or move-in fees that socialize the cost of bad tenant behavior across all renters.

It also reflects well on the Johnson Administration that the bill reforms security deposits. Part of the reason Chicago has a lot of move-in fees in the first place is that current rules require landlords to segregate deposits in separate interest-bearing accounts (and face stiff penalties if they get the paperwork wrong). Not only is the city cracking down on a bad practice (the junk fees), but it’s creating a better way to manage rental units (security deposits).

But the bill hasn’t approached most of the other challenges it attempts to address in this fashion. A rental registry, for example, is a good idea that would make it easier to understand changes in the city’s housing market and track problematic landlords. But the city plans to fund this registry with fees of between $20-$60 on each rental unit. In a tight rental market, you can expect that cost to be passed on to renters in the form of higher rents.

Stronger tenant protections are valuable, but also drive up costs

In a similar vein, there’s a lot to be said for efforts to reduce evictions via a right to counsel. There is an inherent power imbalance between landlords who have legal representation and tenants who often can’t afford it. Evictions are also damaging events that can trigger a spiral of other costs and often homelessness. In Chicago, the Law Center for Better Housing found that the presence of an attorney reduces evictions 25%.

But they also make renting to tenants riskier – especially lower income ones who are more likely to struggle to pay rent. Slower, costlier evictions raise the likely operating cost of a unit – and mean that at the margin, landlords will need to raise rents, cut maintenance spend, or take units off the market. It also means that the marginal, lower-cost new construction might no longer be financially viable.

In a 2026 working paper, a group of researchers found that New York’s staggered right-to-counsel program drove up rents by 1.2-1.6%, overwhelming the benefits to the few tenants who benefited from legal representation. And in a broader study of tenant protections, a paper published in the Journal of Urban Economics finds that a one standard deviation increase in an index of tenant protections resulted in a 14% increase in median rents and a .03% increase in homelessness.

In an ideal world, better representation and clearer rules encourage faster decisions and resolve disputes more quickly. That seems to be what the Department of Housing is hoping the new Bureau of Rental Housing services will do. But it’s hard to believe that the current iteration of DOH can function as an honest broker in these conversations. In the affordable housing construction domain, DOH has developed a toxic relationship with the affordable developers who it is supposed to work with and regulate to provide housing. This bill was directly introduced to the Housing Committee, and landlords are loudly protesting that they weren’t consulted as it was drafted.

Sky-high relocation payments will do lasting damage

But the truly wild piece of this legislation is the final section. Any time a landlord decides not to renew a lease, they are required to offer the tenant a justification. And any non-renewal that’s not based on poor tenant behavior (i.e., non-payment of rent or damage to the unit) requires relocation payments:

• If a landlord chooses not to renew a tenant’s lease because they want to move a relative in, convert the unit to a condo, make significant repairs, or demolish the unit, they have to pay the tenant the greater of $5,000 or 5 months’ rent.

• If the landlord chooses not to renew the lease for any other reason, or the landlord “increases rent with the intention of encouraging the tenant to refuse to renew the rental agreement,” they are on the hook to pay the tenant the greater of $10,000 or 10 months’ rent.

I think it’s worth noting that this is not something that has been studied extensively, for the simple fact that only a handful of other cities include provisions like this. Most of the cities that do, like San Francisco and Los Angeles, also have sky high (read: broken) rental markets. And none of them impose provisions as costly or sweeping as what’s being considered here - particularly when you consider that Chicago’s rental rates are generally much lower than the other cities on the table.

We are already in a tight rental market. A substantial increase in rental costs will rapidly translate into higher rents. Part of this will be immediate – landlords will factor in the risk that they have to make relocation payments, and crank rents accordingly. But there are likely a number of other, second-order effects that will occur as well:

• Fewer small landlords: Smaller landlords are the ones most likely to need to move in a family member, or move a tenant out for a renovation. They’re also least likely to be able to handle additional paperwork and costs – and most likely to be threatened by non-payment or rising operating costs. I don’t think small landlords are necessarily good (in my experience, the best ones are better than corporate landlords, and the worst ones are far, far worse), but it’s reasonable to expect more consolidation after this bill passes.

• Fewer two- and three flats: As Charlie Cohen notes, Chicago’s traditional stock of naturally occurring affordable units are getting squeezed from two sides – in high-income neighborhoods, 2-3 flats are getting de-converted into single family homes, and in low income ones rents often can’t cover upkeep costs. Substantially increasing the risk (and cost) of managing a small rental building is likely to put both trends into overdrive – accelerating both deconversions and demolitions.

• More ‘for-cause’ evictions: Today, there are a lot of edge cases where a tenant is a pain (slow on their rent, noisy enough to annoy their neighbors but not get the cops called on a regular basis), that landlords handle with non-renewals today. But if that path now requires forking over at least $10,000, it’s going to become a lot less appealing to wait those tenants out. Landlords may simply begin the eviction process as soon as they can establish cause.

A recipe for less housing

As the risks and costs of renting to tenants spike, it will become even harder to get new housing units to pencil. That will leave more tenants facing prohibitive rent hikes, and living in older, substandard housing stock.

Of course, in the long term, the only path to affordability is more housing: giving tenants more options and bargaining power, and reducing the ability of landlords to raise rents or skimp on maintenance. Decades of academic research confirm that adding more housing reduces rents, evictions, and homelessness.

But today, Chicago ranks dead last among our big city peers when it comes to new housing construction. Relative to their populations, Houston and Phoenix are building 3-4 times as much housing every year as we are. Even New York and LA are building twice as much. It should come as no surprise that we’re seeing some of the fastest rent hikes in the nation.

You know what won’t help fix this problem? Requiring landlords to fork over 10 month’s rent if they want to get rid of a bad tenant.

The way forward: tenant protections and aggressive upzoning

If we were actually trying here, there’s space for a powerful housing bill that protects renters in the short-run and for the long-term. In addition to the good parts of this bill like the junk fee reforms and rental registry, you could put together a right to counsel program with clear timelines on cases, and pair it with a stronger emergency rental assistance program, that helps tenants avoid evictions when things go wrong.

If you combined that with an aggressive, citywide rewrite of the zoning code to legalize more housing in dense, high-demand parts of the city, you could expect far more construction in Chicago even as you strengthened rental protections. Renters would benefit from short term protections and while gaining long-term market power, and we’d all benefit from living in a City that was affordable and growing.

But that would require some hard political choices. Neighbors would complain about new developments, Alders would have to cede some power, and we’d have to come up with the cash to reliably fund emergency rental assistance. None of those would be easy. I’m hopeful we’ll see some version of that deal in a future administration.

But in the meantime, Mayor Johnson has presented an election year short-cut that ignores hard tradeoffs and abandons any effort to address Chicago’s affordability crisis. This bill would make life harder and more expensive for Chicago renters. City Council should reject this ordinance.