Philly is offering loans for landlords to repair properties and maintain the city’s affordable housing

Philadelphia’s small landlords — those the city relies on to provide affordable housing for its residents — can apply for millions of dollars in state and city funds in a new loan program that aims to fix and preserve their aging rental homes.

The city’s established loan and grant programs for home repairs focus on owners who live in their homes. But many of the city’s rental properties need repairs. And some of the small landlords who struggled during the pandemic either sold their rentals or deferred maintenance, jeopardizing the city’s affordable housing supply. Home repairs also are a frequent sticking point between tenants and their landlords during eviction proceedings.

Rental property owners who receive loans through the Philadelphia Housing Development Corp.’s new Rental Improvement Fund must follow rent limits, and cannot raise their rent by more than 3% annually.

At a news conference Wednesday, State Sen. Nikil Saval, whose signature Whole-Home Repairs Program will provide $5 million of the rental repair program’s funds, thanked “small landlords who endeavor to do right by their communities and the people they serve.”

“Everyone deserves to live in a home that is safe, healthy, and affordable,” he said. “It doesn’t matter whether you own your home or you rent it, your home is your home, and this is your right.”

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The rest of the program’s funds, up to $4 million, will come from City Council’s Neighborhood Preservation Initiative.

Steve Hawkins, a landlord who participated in the program’s pilot, which started about six months ago, said that, initially, he was skeptical. But with his loan, he was able to complete about $16,000 worth of work in the West Philadelphia home he purchased in 1999.

He got the roof fixed, which alone cost about $8,500, he said. He got new floors throughout, new ceiling fans and countertops, new tiles in the shower, and new water-efficient toilets. New windows are coming.

“To get all these things fixed at one time is really mind-blowing,” Hawkins said at the news conference. He called the program “a win-win” for tenants, landlords, and communities.

So far, the program has closed 40 loans for a total of about $950,000, said Rachel Mulbry, housing programs manager at the Philadelphia Housing Development Corp. About 150 landlords are in the process of applying.

The program isn’t looking for landlords whose properties are in fine shape and just want cosmetic fixes, Mulbry said. The agency wants “the folks with roof leaks and where the electrical wiring is a fire hazard, and where tenants are complaining about mold. We want folks without rental licenses who can’t get insurance. Those are the types of properties that we most want coming through this program.”

» READ MORE: Philadelphia’s affordable housing strategy depends on repairing existing homes

She said the agency’s hope “is to set up a really robust, long-term referral pipeline” of landlords through entities such as the city’s Eviction Diversion Program, the Philadelphia Housing Authority, utility and weatherization programs, and the Department of Licenses and Inspections.

Greg Wertman, president of HAPCO Philadelphia, the city’s largest association of rental property owners, which represents many small landlords, said his group has been pushing for something like the Rental Improvement Fund for years.

“The preservation of affordable housing that helps the mom-and-pop landlords stay in business is essential in a city that doesn’t have anywhere [near] enough affordable housing,” he said.

At Wednesday’s news conference, City Councilmember Jamie Gauthier agreed that the city needs to invest in small landlords “that are providing housing to low-income and working-class neighbors.”

“If we let them go under, then affordable housing goes under and families go under,” Gauthier said.

The loans can cover repairs that address safety, health, habitability, or utility concerns, such as roof and structural repairs, mold and lead remediation, and heating and cooling installation or repair. A licensed and insured contractor must complete repairs.

So far, roof work has been popular, as well as work on electrical, plumbing, and HVAC systems, Mulbry said. Some landlords have added cooling for the first time.

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The program offers two types of loans: one for up to $24,999 per property that is fully forgiven after 10 years, and a 15-year loan for up to $50,000 per unit to be paid back at 0% interest.

A landlord can receive up to $100,000 from the fund.

Landlords can apply for funds if they own 15 or fewer rental units across five or fewer properties.

To be eligible, landlords cannot charge more than $1,081 for a studio, $1,218 for a one-bedroom unit, $1,470 for a two-bedroom unit, or $1,789 for three bedrooms. Landlords whose tenants use federal housing vouchers, also known as Section 8 vouchers, are exempt from the rent limits.

There are no income requirements for landlords.

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Rental property owners must be current on city taxes or in payment agreements, and have rental licenses and property insurance, unless they need the loans for repairs in order to get those.

During the term of the loan, they have to fix any code violations within six months.

As part of the loan application, rental property owners have to provide an itemized cost estimate from a contractor of the work that needs to be done. And the Philadelphia Housing Development Corp. will inspect properties to make sure that proposals are reasonable and that no health and safety issues are neglected.