Illinois, alongside states such as California and New York, has traditionally been a difficult environment for landlords. But Illinois, and Cook County in particular, which is where Chicago is located passed the RTLO, the Residential Tenant Landlord Ordinance, and now that the eviction moratorium is being lifted, is going to drive out landlords in droves and could result in an Illinois housing crisis – impacting renters and regular homeowners negatively.
Firstly, let’s talk about the RTLO and why it’s so adverse for landlords.
The RTLO impacts suburban cook county and expands renter rights across Chicago and several adjoining suburbs, which is generally a good thing but has several provisions that will put landlords in a bind.
The RTLO is applicable to all new leases and yes, lease extensions count as a new lease.
With the eviction moratorium set to expire in Illinois on October 3, there will likely be a significant uptick in the number of new leases.
So what are some of these provisions that could put landlords in a bind.
• There are limits to late fees. Late fees cannot exceed $10 if the rent is less than or equal to $1,000, and if it exceeds $1,000, it cant exceed $10 plus 5% for any amount of rent over $1,000.
• If the tenant has back rent, and doesn’t pay rent within 5 days from receiving notice from the landlord, the landlord can pursue eviction. However, at any point during the eviction proceedings if the tenant pays the back rent, the landlord must dismiss the case. Meaning the landlord will be out lawyer fees and other costs for commencing the eviction proceedings.
• Tenants will no longer pay landlord attorneys fees in successful eviction cases where the courts have effectively decided that the tenant is in violation of the terms of the lease.
• Conversely though, the tenant can recover their attorney fees from the landlord in several instances
• The RTLO provides more latitude for tenants to withhold a portion of rent payments in the event of repairs and does not require incremental documentation in various cases.
• If there is a reason beyond back rent for which the renter has breached the rental agreement, the landlord has to give the tenant 60 days notice on top of an initial 10-day notice, so 70 days in total, to leave the property.
Now there are provisions in the RTLO that absolutely make sense along the lines of landlords’ duty to repair the property, provide things like heat, tenants rights around landlords accessing the property, amongst others.
But landlords definitely have to think twice considering their potential loss with the RTLO and whether the rental unit is worth it in their investment portfolio.
Now if more landlords decide that it’s not worth it, and this is particularly applicable to the mom and pop landlords, who as I have talked about in prior videos, make up almost 30% of the rental market, the number of properties put on sale could skyrocket once evictions have been completed following the eviction moratorium, thus depressing property values.
This would impact homeowners that aren’t in the rental game.
And for renters, they would now be dealing with a concentration of large landlords with the exit of the mom and pop landlords.
Further, there would be a reduction in the number of new developments built by developers due to the suppressed demand for real estate.
Now Chicago in particular has had increases in property values of late, but it has lagged other population hubs, a large part of it being the rising property taxes, but that is likely a discussion for a separate video.
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DISCLAIMER: The opinions expressed in these videos are not meant to be financial advice. Always consult with your financial advisor and do your own due diligence as individual facts and circumstances may vary.
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