Philadelphia’s rich history has left a legacy that includes some of the oldest housing stock in the country. As maintenance and repair needs grow, small landlords often can’t afford or access capital to make much-needed repairs.
Traditional lenders are less willing to make loans of under $100K, which places capital for small to moderate repairs out of reach. This has significant and generational impacts on the health, safety, and economic security of renter households. PHDC has established a Rental Improvement Fund to help small landlords make these repairs.
Which landlords and properties are eligible?
- Landlords who own no more than 5 properties and no more than 15 units
- Units where the current rent is affordable to households earning at or under 60% AMI
- Property must meet Philadelphia’s code requirements after repairs are completed.
- Properties must have a valid rental license, unless the loan proceeds will be used to address open code violations or do lead remediation work that currently prevents the property from getting a rental license. In those cases, a rental license must be obtained immediately following completion of the repair work.
- Priority will be given to units currently occupied by a tenant, but vacant units with a valid rental license may be eligible in some cases
What repairs are eligible?
Loan proceeds can be used for any repair that addresses a safety, health, habitability, energy or water efficiency, concern. Examples of repairs that are covered include (but not limited to):
- New and repaired roofs, windows, doors
- Repairs to deteriorated walls, floors and ceilings
- Asbestos, mold, and lead remediation
- Electrical and plumbing improvements
- Energy efficiency upgrades
- Heating and cooling systems
- And much more!
How does loan forgiveness work?
All loan payments are deferred and the loan principal and interest are ultimately forgiven as long as the conditions below are met during the loan term:
- Annual rent increase can be no more than 3%, unless the landlord leases to a tenant with a Housing Choice Voucher (HCV). Landlords with HCV tenants can continue to request rent increases through PHA.
- Three-year good cause eviction protection for current tenant
- Any L&I violations must be corrected within 6 months throughout the loan term
- Maintain a valid rental license
- If the conditions for loan forgiveness are not met or the property is sold, the non-forgiven portion of the loan must be repaid to PHDC at 4% interest.
To be eligible for a loan, the current rent must be affordable to households earning at or under 60% AMI, as shown on the chart below:
|Maxmum Monthly Rent by Number of Bedrooms|
The Rental Improvement Fund offers two loan products:
Loan Option 1 – available now
Loan amount: $10,000-$24,999
Loan term: 10 years
Forgiveness schedule: The loan will be forgiven 20% annually beginning in Year 6 if conditions are met.
Other terms: Prevailing wage is not required.
Loan Option 2 – coming soon in Spring 2023
Loan amount: $25,000-$50,000
Loan term: 15 years
Forgiveness schedule: The loan will be fully forgiven at the end of Year 15 if conditions are met.
Other terms: Prevailing wage is required. Contractors will be required to pay prevailing wage and provide payroll documentation.
If you have questions about the program, please email: email@example.com or call 215-209-8608 to leave a voicemail and receive a call-back within 1-2 business days.
Download the PHDC Rental Improvement Fund Flyer – English and Spanish
Download the RIF Flow Chart
What is the Rental Improvement Fund?
The Rental Improvement Fund (RIF) is a program that offers forgivable loans to small landlords to make repairs to their rental properties. RIF loans are fully forgiven if program affordability requirements are met during the loan term.
Who is eligible for a Rental Improvement Fund loan?
Small landlords who own five properties or less, with 15 total units or less, may apply for loans to repair units that meet the following requirements:
- Current rent for the unit to be repaired meets the program’s affordable rent requirement (see below),
- The unit to be repaired is currently occupied by a tenant,
- The landlord is willing to offer the current tenant a three-year extension of their lease, and
- The property meets building code or is expected to meet building code after the repairs are completed.
In addition, landlords must have current property insurance coverage and active rental licenses for the property to be repaired. If you are unable to obtain a rental license due to the need for repairs, you must agree to obtain a rental license immediately following the completion of repair work.
What is a small landlord?
A small landlord has an ownership stake in no more than five properties and no more than 15 rental units. The landlord must rent those properties or units for use as a primary residence for a fee, regardless of the length or form of the lease. Please note that any investment properties that are not used for renting as a primary residence (for example, your own primary residence) do not count against this maximum.
Does renting a room in my primary residence count as being a landlord?
Renting a room does not qualify for the Rental Improvement Fund. You may also live in the rental property, as long as the property has more than one housing unit (for example, a duplex).
Is there an income requirement for the Rental Improvement Fund?
No. The only requirements are listed above.
Are corporate entities such as LLCs eligible for the program?
Yes. If a corporate entity meets the eligibility requirements listed above, they can qualify for the program. Corporate entities must submit a copy of the certificate of organization or articles of incorporation with the program application.
What is the affordable rent requirement?
Rent must be affordable to tenants with a total household income at or below 60% of the Area Median Income for Philadelphia:
|Maxmum Monthly Rent by Number of Bedrooms|
Do tenants have to be using Housing Choice Vouchers (HCVs, also known as Section 8)?
No. The unit rent must meet the affordable rent requirement, but it does not have to be paid by voucher.
What kinds of repairs can I pay for with RIF loans?
RIF loans may only be used to repair the specific rental property for which you apply. Repairs must address habitability concerns, improve energy or water efficiency, or make units accessible for individuals with disabilities. Repairs that are covered include, but are not limited to:
- Asbestos, mold, and lead remediation.
- Electrical and plumbing improvements.
- Energy audit and weatherization improvements.
- Fire alarm and sprinkler system installation or upgrades.
- Heating and cooling system repairs and upgrades.
- Improvements to carpeting and flooring.
- Pest control.
- Roof repair or replacement.
- Structural repairs.
What are the loan terms?
There are two loan options. You may select the option that best fits your repair needs.
|Loan Option 1||Loan Option 2|
|Term||10 years||15 years|
|Prevailing Wage||Not required||Required|
Am I required to spend any of my own funds?
If you choose Loan Option 1 and your loan amount exceeds $20,000, or if you choose Loan Option 2 and your loan amount exceeds $40,000, you must contribute the first 20% of the project cost from your own funds.
If this applies to your loan, you must provide a bank statement with your application to prove you have sufficient funds to cover the first 20% of the project. After your application is approved, you will pay the first 20% of the total project cost. Once a receipt or other proof of payment is submitted, the Rental Improvement Fund will process loan draws to reimburse you for the 20% and to pay for the rest of the project cost.
What is the maximum loan available?
The loan maximum per property is $50,000. The loan maximum per landlord is $100,000. This means that landlords who own more than one property can apply for more than one loan, but the total of all loans made to a single landlord cannot exceed $100,000.
What is prevailing wage?
Prevailing wage is a rate of pay determined by the US Department of Labor, depending on the type of work and the location where work is performed. If you accept an RIF loan above $24,999, you must pay your contractor(s) prevailing wage and submit certified payroll records for your project. If prevailing wage applies to your RIF loan, you will attend an education session to learn more about this requirement and how to submit certified payroll records.
When do I have to pay the loans back?
All loan repayments will be deferred for the first three years of the loan term. Deferral means you do not have to make payments on the loan. After the first three years, you can apply for continued deferment each year. If you meet the program requirements, payments will continue to be deferred and a portion of the loan will be forgiven each year until the loan is completely forgiven. If you do not meet forgiveness requirements or the property is sold, the unforgiven portion of the loan must be repaid at 4% interest.
In order for loan repayment to be deferred each year, PHDC will request a copy of the current lease for the repaired unit(s) and review City records to ensure the following requirements are met:
- Any rent increase cannot be more than 3%, unless you lease to a tenant using a Housing Choice Voucher (HCV), in which case you can charge up to HUD’s Fair Market Rent.
- You must provide a current lease for the unit(s) each year.
- The property must have any code violations identified by Licenses & Inspections (L&I) corrected within six months during the loan term.
- You must maintain an active rental license during the loan term.
- You must continue to own the unit(s) during the loan term.
How do I apply for loan forgiveness?
You must apply for loan forgiveness annually by submitting a copy of the lease and a rent certification form for any units repaired with RIF loan funds. PHDC will also review City records to confirm your L&I violation history, rental license status, and property ownership records. If you do not apply for or meet the requirements for loan forgiveness each year, you will have to repay the unforgiven portion of the loan at 4% interest.
Are there early repayment penalties?
Yes. If you take out an RIF loan and choose to fully repay it during the first three years of the loan term, you will pay a penalty. The penalty schedule is:
|Year||Loan Option 1|
Early Repayment Penalty
|Year||Loan Option 2
Early Repayment Penalty
How do I apply for a Rental Improvement Fund loan?
To begin the application process, first gather the documents you will need:
- Current lease for unit(s) to be repaired.
- Tenant Permission Form signed by you and the tenant(s) living in the unit(s) to be repaired. Download a copy at https://tinyurl.com/rif-tenant-form.
- Scope of work with itemized cost estimate for repairs, if available. If you do not have a scope of work yet, you can still apply.
- Bank statement proving you can cover 20% contingency costs, if your requested loan amount is $20,000 or more.
Next, complete the online application. PHDC will review your application and City records for eligibility and contact you to request any missing items. If your application meets eligibility screening requirements, you will be invited to continue the process.
Then, you will attend an online education session to learn more about the program, repair project management, and working with contractors. If you have not done so already, you will be required to find contractors and obtain three competitive quotes for the repairs you will fund with the loan.
PHDC will then schedule an initial inspection to confirm the repairs needed at your property and the approximate cost of the project. Once these steps are successfully completed, you will sign the documents to close the loan. If your loan amount is above $20,000, you will pay the first 20% of project costs and then submit proof of payment to be reimbursed. If your loan amount is below $20,000, you will receive your first loan draw of 50% of the total loan amount to begin the repairs.
How long does the whole process take?
The underwriting process can take up to 10 business days once you have submitted all required documents for review. While project timelines vary significantly depending on the size and complexity of repairs, all repairs must be completed within one year of settlement.
What is the landlord education requirement?
You must complete a one-hour landlord education session prior to closing a RIF loan. The session will provide an overview of the RIF program and process, an introduction to repair project management, tips for selecting a contractor, an explanation of construction permit requirements, and an introduction to fair housing law. Sessions will be offered virtually via Zoom.
Does PHDC have contractors who will determine what repairs are needed and complete the repair work?
No. You must hire your own contractor.
Will PHDC help me choose a contractor?
PHDC does not provide contractor information or recommendations. You will learn about how to choose a reputable contractor in the landlord education session. You can find a list of licensed contractors on the City website at https://li.phila.gov/Contractor-Lookup/. Choosing a licensed and insured contractor will be your responsibility.
Is a general contractor required for Rental Improvement Fund projects?
Hiring a general contractor is recommended, but not required, for Rental Improvement Fund projects. If you have experience managing repair projects, you can choose to hire subcontractors directly and coordinate the work yourself. You will be required to submit proof of current licensure and insurance for all subcontractors. If your loan amount exceeds $25,000, you will be required to submit certified payroll records for each subcontractor.
Where can I get help with the application?
PHDC’s Help Desk is available via email and phone to answer questions about the program and application process. A PHDC Service Representative will be assigned to help you navigate the program as soon as you submit the online application. Since we may reach out by email, check your inbox and spam or junk folder regularly after your submission. Neighborhood Advisory Committees (NACs) can also provide computer access and assistance with the online application.
Where can I get help with the permitting process?
The Philadelphia Permit Navigator is a simple method for determining what type of permit(s) you need for your repair project. Go to https://permits.phila.gov/, select the Residential Portal option, and answer the quiz questions to get your result. There is also a form to request email assistance from City staff.