Illinois rental law is changing in a meaningful way starting July 1, 2026, and landlords in Chicago and the surrounding suburbs should begin preparing now. House Bill 3564 introduces new limits on application fees, expands disclosure requirements, and bans several common rental charges. While the law is designed to increase transparency and protect renters, it also reshapes screening standards, risk exposure, and long-term returns for property owners. Landlords who review their leases, pricing models, and tenant placement strategy early will be best positioned to stay compliant and competitive.
What Is Illinois House Bill 3564?
House Bill 3564 is a statewide rental-housing reform scheduled to take effect July 1, 2026. It establishes new rules governing:
-
Rental application and screening fees
-
Lease disclosures
-
Prohibited charges and fines
-
Fee transparency in listings and leases
The legislation applies broadly across Illinois, including Chicago and most surrounding suburbs, and creates a minimum standard that local ordinances must meet or exceed.
For landlords, this is not a minor technical update — it’s a structural shift in how rental housing is operated.
What Changes Under HB 3564?
1. Fee transparency becomes mandatory
All non-optional fees, whether one-time or recurring, must be clearly listed on the first page of the lease. If a fee is not disclosed there, the tenant cannot be charged for it — even if it appears elsewhere in the lease.
Listings must also clearly disclose:
-
All required fees
-
Whether utilities are included in rent
This raises the bar for accuracy and consistency across marketing, leasing, and documentation.
2. Application fees are capped
Rental application and background-check fees are capped at $50, unless a third-party screening cost exceeds that amount.
To charge more than $50:
-
The landlord must pay the third-party cost upfront
-
Provide receipts
-
Bill the applicant within 14 days
If that process isn’t followed exactly, the fee is waived.
Additionally, application-related fees cannot be used as grounds for eviction during the first year of a lease.
3. A broad category of fees is prohibited
HB 3564 prohibits charging tenants for a wide range of items, including but not limited to:
-
Lease modification or renewal fees
-
Eviction notices or filings prior to a court order
-
After-hours maintenance requests
-
Routine maintenance or upkeep (unless tenant-caused)
-
Pest abatement not caused by the tenant
-
Maintenance hotlines or service calls
-
Travel time for repairs
-
Move-in or move-out walkthroughs
4. Enforcement carries real legal risk
Tenants may bring civil actions for violations, including:
-
Monetary damages
-
Injunctive relief
-
Attorney’s fees and costs
This elevates compliance from “best practice” to risk management necessity.
Who Is Exempt?
HB 3564 does not apply to:
-
Owner-occupied properties
-
Buildings with six units or fewer
All other residential rental properties entering into leases after July 1, 2026 are subject to the law.
How This Law Will Change Landlord Behavior
While the intent of HB 3564 is greater transparency and fairness, the practical impact will likely reshape landlord decision-making in several ways.
Stricter tenant screening
With fewer fee-based tools to offset risk, landlords are likely to:
-
Require higher credit scores
-
Demand more stable income histories
-
Tighten rent-to-income ratios
-
Reduce tolerance for borderline applications
The approval pool may narrow, particularly for tenants with non-traditional income or weaker credit profiles.
Higher base rents
When certain fees are eliminated but operating costs remain fixed — or rise — many landlords will adjust base rent instead. In effect, some costs may shift rather than disappear.
Fewer concessions and incentives
Move-in specials, flexible terms, or creative incentives may decline as landlords seek predictable, lower-risk tenancy structures.
Greater emphasis on enforcement
When margins tighten, landlords tend to enforce lease terms more strictly, reducing flexibility around late payments, unauthorized occupants, or violations.
What Chicago Landlords Should Do Before July 2026
The most successful landlords will treat this change as a planning exercise, not a last-minute scramble.
Now is the time to:
-
Review lease templates for fee compliance
-
Audit listings for disclosure accuracy
-
Re-evaluate screening criteria and risk tolerance
-
Adjust pricing models to reflect lost fee revenue
-
Strengthen tenant placement standards
Waiting until mid-2026 increases legal and financial exposure.
FAQ: Common Questions About HB 3564
When does the law take effect?
July 1, 2026.
What if a fee isn’t listed on page one of the lease?
The tenant is not required to pay it.
Can application fees exceed $50?
Only if the actual third-party cost is higher and proper documentation is provided within 14 days.
Does this replace Chicago’s RLTO or Cook County rules?
No. It adds a statewide layer. Local rules still apply if they are more protective.
Can tenants sue landlords for violations?
Yes. The law creates a civil right of action.
Illinois rental law is evolving, and HB 3564 is a clear signal of where things are headed: more transparency, tighter rules, and higher expectations for landlords.
If you own rental property in Chicago or the surrounding suburbs, now is the time to review your leases, pricing strategy, and tenant placement process.
If you want help with tenant placement or full property management that’s built around compliance and long-term performance, our team can handle it. Reach out anytime.
