Safe & Healthy Homes Act

Rental Property Investor · Philadelphia, PA · Member since 2015 · 483 posts · 362 votes

Philadelphia's new Safe & Healthy Homes Act goes into effect Nov 1. It raises the stakes for small landlords. Unresolved property violations could put rental income at risk, and delays in addressing problems could make repairs more expensive.

What's concerning is that landlords may not even know a complaint has been filed until the situation escalates and tenants legally stop paying rent. It is crazy!

There are free property-monitoring tools that can help owners stay aware of 311 complaints and L&I violations before they become very big problems.

Are other Philly landlords following these changes? How are you monitoring your properties?

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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

@Chris Seveney This goes well beyond being a good property manager who stays on top of compliance. The underlying issue is the additional cost imposed on landlords in neighborhoods where rents and property values already struggle to support the cost of maintaining housing. Requiring higher standards does nothing to address how those improvements will be paid for and will lead to less landlords wanting to own and maintain necessary housing in Philadelphia.

Council members who in Philadelphia are the ones who put forth bills such as this rally constituents around stronger tenant protections and affordability while ignoring their own role in driving up the cost of owning and operating rental housing which trickles down to the cost of housing their constituents are ultimately responsible for. Sadly, many landlords are being placed in nearly impossible predicaments.

While cost basis matters, my hard & fast rule for owning real estate in Philadelphia is that rents need to be around $1,500 for a one-bedroom, $2,000 for a two-bedroom, and $2,600 for a three-bedroom apartment, or $3,000 + for a SFH. Even those rents are difficult to make pencil out for heavy rehabs, and certainly for ground-up development. Some of that reflects city code and burdensome permitting costs and requirements, but building materials and labor are also simply expensive.

Across the 21 new-construction units in my immediate pipeline, I believe the average projected rent exceeds $4,250/m. My heavy rehabs and conversions that are $1,500 1BRand $2,000 2 BR only work because they include a significant commercial component. Those NNN leases substantially reduce my operating expenses, and the commercial space generates far more revenue per square foot than the residential space.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2d
For me, this is why it is very critical to have a rockstar property manager.
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G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 877 votes
2d
I’d definitely keep an eye on it. Having a good property manager helps, but I’d still want to know what’s happening with my properties. I’d much rather hear about a complaint or violation early and deal with it before it turns into a bigger, more expensive problem.
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Sheryl Sitman
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Rental Property Investor · Philadelphia, PA · Member since 2015 · 483 posts · 362 votes
2d
@G. Brian Davis @Chris Seveney It is a must to have a great PM in Philly - and not all are great as you can imagine. But they struggle to keep track and can not proactively review each unit. Actually, one asked me to help him out with that with a tool I am using to monitor my portfolio. It happens all the time that a property gets a minor violation and a fine but no one knows because the city does not even send the notice to the right address . . . But now, the risk is not just the fine. Some violations will lead to rent abatement and refunding tenants for rent paid - even if they are happily living in the unit.

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Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
2d
@Chris Seveney This goes well beyond being a good property manager who stays on top of compliance. The underlying issue is the additional cost imposed on landlords in neighborhoods where rents and property values already struggle to support the cost of maintaining housing. Requiring higher standards does nothing to address how those improvements will be paid for and will lead to less landlords wanting to own and maintain necessary housing in Philadelphia.
Council members who in Philadelphia are the ones who put forth bills such as this rally constituents around stronger tenant protections and affordability while ignoring their own role in driving up the cost of owning and operating rental housing which trickles down to the cost of housing their constituents are ultimately responsible for. Sadly, many landlords are being placed in nearly impossible predicaments.
While cost basis matters, my hard & fast rule for owning real estate in Philadelphia is that rents need to be around $1,500 for a one-bedroom, $2,000 for a two-bedroom, and $2,600 for a three-bedroom apartment, or $3,000 + for a SFH. Even those rents are difficult to make pencil out for heavy rehabs, and certainly for ground-up development. Some of that reflects city code and burdensome permitting costs and requirements, but building materials and labor are also simply expensive.
Across the 21 new-construction units in my immediate pipeline, I believe the average projected rent exceeds $4,250/m. My heavy rehabs and conversions that are $1,500 1BRand $2,000 2 BR only work because they include a significant commercial component. Those NNN leases substantially reduce my operating expenses, and the commercial space generates far more revenue per square foot than the residential space.
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Matthew MorrowBusiness Member
Investor · PA - NY - NJ · Member since 2019 · 714 posts · 251 votes
6h
@Sheryl Sitman this is the kind of rule that catches owners who aren't paying attention. If a complaint can be filed without you hearing about it, I'd check every property's open violations on a set schedule rather than waiting for a letter. Stuart's point on costs is real too. In my market I keep at least $5,000 per door set aside for maintenance, and older housing stock is exactly where that reserve gets used. Fixing things quickly and documenting every repair is still the best protection you've got. Interested to hear how other Philly owners are tracking it.
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- Sheryl Sitman
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  Rental Property Investor · Philadelphia, PA · Member since 2015 · 483 posts · 362 votes
  5h
  It is a gotcha law. If someone files a complaint against your property there's not really any efficient way to know. Even violations are either never sent out to the owner, sent to the wrong address, or sent months later. I had a tenant not cut the grass for a couple of weeks in a single family so they got a fine in August I received that notice mid-october... I created a tool I am even giving away to monitor all of the public databases. But there are multiple departments in the city of Philadelphia that are able to issue violations and not all have publicly available databases. Tenant advocacy groups will be proactively looking for meaningless, mistaken and minor violations to support tenants in filing for rent refunds. It would be similar to encouraging and allowing people to review paperwork of all of the restaurants they ate at and go back years to find something so that they can demand a refund regardless of a satisfactory and safe experience, because there was a lapse in some certification. Not only this but frequently the inability of an owner to handle something is more to do with City inefficiencies and mistakes than anything else. It might sound good to try to have all businesses strive for absolute perfection in compliance but if you make doing business unprofitable unappealing and overly cumbersome guess what happens. And none of this is theoretical just look at any market where it's easier to be a housing provider and you will find lower rents and higher quality housing compared to any heavily regulated market. I would dare say the less regulated, the safer the housing.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6h
@Stuart Udis Wow you know the professional tenants will understand this and will start to use it to legally not pay rent.. this could easily create a situation were many low end areas become functionally and economically obsolete creating board ups all over the place and values to Plummet. Just sayin. U give tenants that kind of ability to file complaints that legally can stop rent and they will use it like crazy is my thought
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