Philadelphia’s New Security Deposit & Application Fee Law: What Landlords Need to Do

Vacancy risk, turnover, compliance, then your best applicant asks, “Can I split the deposit?” In Philadelphia, that’s often a required yes.

Two new ordinances, Bill 250045 (passed June 5, 2025) and Bill 250044-A (passed June 12, 2025), were signed on September 3, 2025, and take effect on December 2, 2025. They reshape how you charge application fees and collect deposits.

What’s changing hits your cash flow, leasing speed, and legal exposure. Here’s the clear, practical playbook to stay compliant and ahead.

What These Two Ordinances Do—and Why They Matter

One law standardizes application fees and screening practices to curb “junk fees” and prevent credit harm. The other keeps security deposits but changes timing by requiring an installment option when more than one month is collected in year one, with a small-landlord exemption.

The result: lower move-in barriers, more explicit rules for owners, and fewer disputes, if your systems are ready.

Compliance Checklist: Steps and Deadlines

Check your screening invoices and set the application fee at your real cost, up to $50. Use soft-pull credit checks only, and track that each applicant is charged no more than once in any 12 months.

Update application forms to disclose your capped fee and that copies of reports will be provided. Add a lease addendum offering the deposit installment option when you charge more than one month.

Set up billing for three installments and train staff in time for the effective date (December 2, 2025). Applies to leases executed or renewed on or after that date.

Application Fees: Clear Limits and Simple Steps

Charge only what screening actually costs, capped at $50. If no screening is done, no fee is allowed. Limit one screening fee per applicant within any rolling 12-month period across your portfolio or the same property.

Use soft-pull credit checks (hard pulls are prohibited). After screening, provide the applicant with copies of any credit or background reports you used.

Security Deposits: Caps, Installments, and Exemptions

Pennsylvania limits deposits to two months’ rent in year one and one month's rent thereafter. After five years, increases aren’t allowed.

Under the city’s rules, if you require more than one month as a deposit in the first lease year, you must offer installments: one month at signing, then the balance in three equal payments starting the next month.

Small landlords, those with two or fewer units, including commonly controlled units, are exempt. This approach lowers move-in costs for renters while preserving your ability to collect a full deposit.

Penalties and Enforcement

Breaking the rules has teeth. Violations of Chapter 9-800 are Class III offenses, with fines up to $2,000 per violation. For security-deposit violations, tenants can recover their actual losses or choose a flat amount equal to one month’s rent, plus reasonable attorneys’ fees.

In short, noncompliance risks fines, damages, and paying the other side’s lawyer.

FAQ

Can I collect the first month’s rent up front?

Yes, rent isn’t covered by these sections.

What’s the maximum deposit?

Two months in year one; one month thereafter under state law.
Do single-unit owners owe installments?

No, owners with two or fewer units are exempt.
What records should I keep?

Proof of screening costs, copies provided, fee logs, and deposit ledgers.

Compliance Is the Floor—Execution Is the Edge

Philadelphia’s move-in rules now reward precision. Cap application fees at actual cost or $50, avoid hard-pull credit checks, charge each applicant only once per 12 months, and give copies of any reports.

If you require more than one month’s deposit in year one, accept one month up front and the balance in three equal installments (small-landlord exemptions apply).

Violations risk fines, damages, and attorneys’ fees. Standardize templates, document processes, and automate billing to protect cash flow and reduce disputes.

Partner with Innovate Realty & PM to roll out compliant screening, airtight lease addenda, automated billing, and continuous monitoring, so you stay legal and profitable. Book a meeting today!