This post was co-written with Steffany Bahamon.
Chicago is going to regulate rental fees no matter which renter protection ordinance City Council passes. Both the mayor’s Protecting Renters Ordinance (PRO) and the alternative introduced by Ald. Gilbert Villegas (FAIR) write new fee rules, and both sit on top of the same new state law. The question isn’t whether Chicago should regulate junk fees; it’s how the list of allowed fees works, whether landlords have to show their costs, and what happens to move-in fees.
Abundant Housing Illinois (AHIL) supports PRO’s fee structure with two changes: let tenants choose between a security deposit and move-in/move-out fees (never both), and replace fixed dollar caps with a “reasonable documented cost” standard. This is the companion to last week’s post on what Chicago’s rental registry should collect and how to pay for it. (These memos are posted here because the AHIL website is presently being transferred to a new system.)
What state law already does
HB 3564, passed in May 2026, added fee rules to the Illinois Landlord and Tenant Act, effective January 1, 2027. Every non-optional fee has to be disclosed on the first page of the lease, application fees are capped at $50 (a landlord can bill a higher third-party screening cost only with a receipt, within 14 days), and landlords can’t rename a fee to get around the rules. Springfield deliberately left move-in fees and security deposits to local governments, which is where PRO and FAIR come in.
PRO and FAIR take opposite approaches
PRO says a tenant can be charged a security deposit, up to one month of prepaid rent, and a specific list of allowed fees. Everything else is out. FAIR does the reverse: it bans specific practices and permits the rest.
| FAIR | PRO | |
|---|---|---|
| Structure | Bans listed practices, permits the rest | Only listed fees are allowed (an “allow list”) |
| Application fee | $50, with documented overage billable (state law) | The lesser of the actual cost or $20 |
| Move-in/move-out fees | Move-in fee allowed if reasonably related to estimated cost | Not on the list, which means they’re banned |
| Security deposit cap | 1.5 months’ rent | 1 month’s rent |
| Proof of cost | First-page disclosure only | Itemized cost and documentation before charging |
| Routine maintenance (like repainting units, replacing worn fixtures, vacuuming) | Barred only in pet charges | Barred from every fee |
| Utilities and RUBS | No markup | No markup building-wide, no billing-vendor fees, a written formula showing how utility bills are divided among apartments, 90 days’ notice of changes, bills on request |
FAIR has a no-rename clause, but it only catches relabeling an existing fee, not inventing a new one. Under a “ban list” approach, a landlord who comes up with a fee nobody thought to ban gets to keep charging it.
An allow list is a typical policy
PRO’s approach isn’t radical. It’s similar to what many other places already do:
- Seattle updated its rental fee rules in August 2026. A fee is legal only if city code or state law authorizes it, regardless of what it’s called. Seattle is stricter than PRO: no pet fees beyond a damage deposit, a flat $10 late fee, and no fees for paying by check or ACH.
- Montgomery County, Maryland permits only an enumerated set of regulated fees.
- Colorado bars fees above the landlord’s actual cost and requires a disclosed utility formula.
Utility billing rules
A ratio utility billing system (RUBS) splits a master-metered building’s utility bill across units by formula, usually based on apartment size and number of occupants (the assumption being that households of similar size use similar amounts of energy). Both ordinances keep RUBS legal. FAIR has one rule: no markups. PRO puts guardrails around it:
- No markup across the building. The total charged to all tenants can’t exceed what the utilities billed.
- No billing-vendor fees. Tenants can’t be charged costs from third-party vendors, aggregators, or resellers.
- No switching mid-lease. A landlord can’t move a tenant from landlord-paid to tenant-paid utilities, or from fixed-rate to variable-rate, during the lease.
- 90 days’ notice before any such change.
- A written formula detailed enough for tenants to calculate their own share, keyed to the Tenant Utility Payment Disclosure Act.
- Bills on request for any period a tenant is charged for.
That’s Seattle’s current position, and close to Oregon’s statewide rules. We support PRO’s approach to utilities as written.
Change 1: a deposit or move-in/move-out fees, never both
A common problem with junk fees is stacking: a move-in fee, an application charge, and a monthly “bundle” fee piled on top of base rent before anyone has moved in. PRO fixes this by banning move-in and move-out fees outright and capping deposits at one month’s rent.
We’d rather let tenants choose one track or the other. The landlord prices both up front, and the renter picks at signing:
- Deposit track: a refundable security deposit of up to one and a half months’ rent (FAIR’s level), held and returned under the city’s Residential Landlord and Tenant Ordinance.
- Fee track: move-in and/or move-out fees at reasonable documented cost, with a combined total of no more than one and a half months’ rent, and no deposit.
A move-in fee at cost is usually a few hundred dollars, not a month’s rent, so the fee track is a cheaper way into an apartment. The either/or rule ends stacking and should mean fewer fights over deposits.
Seattle caps the security deposit and nonrefundable move-in fees together at one month’s rent but leaves the mix up to the landlord. We’d hand that choice to the tenant. Cook County’s Residential Tenant Landlord Ordinance bars disguising a deposit as a nonrefundable fee, and we’d keep that rule: a fee that works like a deposit gets treated like one. A renter who wants money back picks the deposit; one who’s short on cash picks the fee. Capping the fee at documented cost keeps the cheaper option honest.
Change 2: reasonable documented cost, not fixed dollar caps
A cost standard is preferable because it’s based on real costs, while fixed dollar caps written into the ordinance will go stale. PRO already requires an itemized description, the cost, and supporting documentation before any fee is charged. A fee backed by receipts is easier to audit than a flat number nobody has to justify.
What we mean by “reasonable cost”:
- What the landlord actually paid; for turnover fees, a documented estimate from recent turnovers of comparable units
- No routine maintenance, overhead, or profit
- Itemized and documented before it’s charged
For application fees, we’d use the state framework from HB 3564 instead of PRO’s $20 cap. That gives Illinois one application fee standard instead of two. Evanston and Cook County already use cost-based standards for move-in fees.
The fee schedule AHIL supports
Before move-in, a landlord may collect only:
- First month’s rent
- An application fee at actual documented cost, under the state framework (up to the $50 cap in state law, plus documented third-party overage, and free when the tenant provides a reusable screening report)
- The tenant’s choice of one of the following (the landlord offers both, with prices in writing before signing):
- a refundable security deposit of up to one and a half months’ rent, or
- move-in and/or move-out fees at reasonable documented cost, with a combined total of no more than one and a half months’ rent
During the tenancy, only:
- A pet fee, one-time or recurring but not both, at reasonable cost
- Non-recurring costs the tenant triggers (key copies, bounced payments), at actual cost
- Optional services the tenant opts into in writing, at cost
- Utility charges under PRO’s rules: no markup building-wide, no billing-vendor fees, a written allocation formula, 90 days’ notice of changes, and bills on request
Rules for every fee:
- Allow list: anything not on this list is prohibited
- Itemized description, cost, and documentation before charging
- No routine maintenance in any fee
- Every non-optional fee on page one of the lease (state law)
- A fee that works like a deposit is treated as a deposit (meaning it’s returned after the tenant moves out and leaves the unit in the condition previously agreed upon)
- Charging a prohibited fee draws a penalty from the new rental housing bureau of 1.5 times the amount charged
Who else supports junk fee reform
Junk fee reform has been backed by other YIMBY groups, research organizations, and economists:
- Open New York backed the FARE Act, New York City’s ban on making tenants pay broker fees for brokers the landlord hired. Executive Director Annemarie Gray said the law will protect renters from thousands of dollars in broker fees they never asked for.
- Urban Institute recommends upfront disclosure of all fees, banning catch-all cost transfer clauses, banning mandatory services, and allowing evictions only for unpaid rent. Seattle’s council sponsor cited this research when the city unanimously passed its rental junk fee ban in August 2026.
- Center for American Progress proposes capping rental application fees, noting that landlords typically pay screening companies less than they charge renters, and that portable screening report laws often produce limited savings in practice.
- Neale Mahoney, a Stanford economist, worked on national junk fee policy in the Biden administration and flew to Seattle to testify for the city’s rental fee ban.
City Council should pass fee rules that list what a landlord can charge, require receipts for every charge, and let renters choose between a deposit and move-in fees instead of paying both. PRO gets most of the way there; with these two changes, Chicago would have one of the clearest fee standards in the country.
