Illinois Is Cracking Down on Rental Fees
For years, move-in fees and administrative charges became standard practice for many Chicago landlords. Landlords often use these fees to offset legitimate operational costs tied to tenant screening, lease administration, maintenance coordination, and unit turnover. This may soon change statewide.
Illinois House Bill HB 3564 introduces significant changes to how Illinois landlords can structure rental fees and lease disclosures for residential tenants. While the law was originally scheduled to take effect July 1, 2026, a companion bill (HB 5234) currently awaiting final action could push implementation to January 1, 2027.
Regardless of the implementation date, Illinois landlords should begin preparing now.
What HB 3564 Actually Does
HB 3564 prohibits several common rental fees, caps certain tenant charges, and introduces new disclosure requirements for most Illinois residential lease agreements. While certain owner-occupied buildings with six units or fewer may be exempt, the law will apply to the majority of rental properties throughout Chicago and the surrounding suburbs, particularly non-owner-occupied investment properties.
View the Full Text & Bill Status of HB 3564
What Fees Are No Longer Allowed Under HB 3564?
HB 3564 not only caps and regulates certain rental charges, but also prohibits several common fees previously charged by Illinois landlords on covered residential leases.
Under the new law, landlords generally are not allowed to charge:
Move-in fees larger than 20% of the first month’s rent
Administrative or lease processing fees
Lease renewal or agreement fees
Routine walkthrough or inspection fees
After-hours maintenance request fees
Certain pest control charges unless the tenant directly caused the issue
The tenant cannot elect to pay one-time fees in installments if:
The total amount of the one-time fee does not exceed 25% of the first month’s rent
Payment of the last month’s rent is not required at the inception of tenancy
HB 3564 also prevents landlords from renaming prohibited charges under labels like:
“Administrative fees”
“Tenant onboarding fees”
“Lease processing fees”
Similar variations intended to bypass the law
Application and background check fees are still allowed, but they are capped at $50 unless the landlord can document a higher third-party screening cost. Security deposits may not exceed the monthly rent amount. Landlords who continue charging prohibited fees after HB 3564 takes effect may face civil liability from tenants.
The Lease Transparency Requirement
HB 3564 also introduces new lease disclosure requirements intended to make rental costs more transparent for tenants. Under the new law, all non-optional fees must be clearly disclosed on the first page of the lease agreement. If a fee is not properly disclosed, the tenant may not be legally required to pay it. Landlords should review their lease agreements carefully to double-check that all required disclosures are presented in clear and consistent language moving forward. The legislation will also require landlords to disclose whether utilities are included in rental listings and within the lease itself.
HB 3564 Lease Transparency Updates
All non-optional fees must be disclosed on the first page of the lease agreement
Tenants may not be legally required to pay fees that are not properly disclosed
Landlords must disclose which utilities are included in rental listings
Landlords must disclose utility responsibilities within lease agreements
Older lease templates and operational documents may need to be updated for compliance
Landlords should review lease formatting, disclosures, and fee language before the law takes effect
Owner-Occupied Buildings With Six or Fewer Units May Be Exempt Under HB 3564
One important detail for smaller Chicago landlords is that HB 3564 does not apply to certain owner-occupied buildings containing six or fewer rental units. For smaller self-managing landlords, understanding whether your building qualifies for the exemption will be an important first step before making operational or lease changes. Ownership structure, occupancy status, and the property’s legal status can all affect whether the exemption applies. Investment properties that are not owner-occupied will generally still fall under the law even if they contain fewer than six units.
What This Means for Landlords
From an Illinois landlord’s perspective, these changes will have a real operational and potential financial impact. Many of the fees prohibited under HB 3564 helped offset legitimate costs associated with screening new tenants, lease administration, and turning over units between residents, and even more so for smaller independent landlords. The important thing now is not to try to work around the law by simply renaming prohibited fees and facing penalties. Instead, landlords should begin reevaluating their lease structure and rental pricing ahead of the law taking effect.
As Illinois and Chicago rental regulations continue becoming more complex, many property owners are also realizing that compliance and operational oversight now require a far more proactive approach than they did even a few years ago. At PRG Management, we help Chicagoland landlords stay current and compliant on evolving rental regulations while keeping properties operating efficiently.
What Landlords Should Do Before HB 3564 Takes Effect
Chicagoland landlords should begin preparing now instead of waiting for final implementation guidance. Before HB 3564 takes effect, Illinois and Chicago landlords should:
Audit current lease agreements for prohibited or questionable fees
Update lease templates to comply with the first-page disclosure requirement
Review rental pricing structures to account for revenue previously collected through fees
Confirm utility disclosures are accurate across listings and lease documents
Evaluate whether their property qualifies for the owner-occupied six-unit exemption
Consider working with PRG Management, a professional Chicago property management company that stays current on Illinois landlord law and Chicago compliance requirements
Final Thoughts
HB 3564 represents one of the more significant recent changes to how residential leases and rental fees will be handled in Illinois. Whether you own a two-flat or courtyard building in Chicago, or a larger rental portfolio across the surrounding suburbs, compliance can no longer be treated as an afterthought.
At PRG Management, we help Chicagoland landlords and property owners navigate evolving regulations, leasing compliance, tenant management, maintenance coordination, and day-to-day operational oversight. If you would like help reviewing your current lease structure, rental policies, or overall management strategy ahead of the upcoming changes, contact the PRG Management team to request a free property management consultation.