Johnson Prepares Sweeping Rental Overhaul, Chicago CRE Is Skeptical

Chicago Mayor Brandon Johnson is gearing up to introduce a major overhaul of the rules regarding renting in the city, a move that would have significant ramifications for multifamily owners and operators across the city. 

Johnson is expected to propose the Protecting Renters Ordinance in a city council committee this month that aims to update Chicago’s 40-year-old Residential Landlord Tenant Ordinance and offer a suite of protections to tenants. This includes a tenant bill of rights, citywide “just cause” eviction, a ban on move-in and move-out fees and a potential backdoor framework for rent control.

It’s unclear if the measure will have the support to pass, and it could change throughout the city council process. The Chicago Tribune reported late last month that the mayor’s team had proposed it to the 19-member Progressive Caucus but had not had discussions with more moderate aldermen who would be critical votes to get the legislation through the city council. 

But the mayor’s push to overhaul landlord-tenant rules further underscores the tense relationship between the administration and the CRE industry ahead of the 2027 Chicago mayoral election next February, as industry stakeholders rally against the proposal. 

“It makes Chicago look really bad and really uninvestable,” said Reagan Pratt, director at the Real Estate Center at DePaul University. “That’s why there’s not a lot of institutional capital coming here, and it frustrates me because it’s like an own goal.” 

The ordinance would require landlords to pay for a portion of a tenant’s relocation following an "unconscionable rent increase” or when a landlord chooses not to renew a lease or ends it early. 

Operators would also have to fund legal representation for tenants facing eviction, and the measure would establish a rental registry disclosing major building owners across the city, at an annual charge of up to $20 per unit, according to the Tribune. The city would use the estimated $20M it would bring in annually to enforce rental regulations.

Tom Benedetto, government affairs director for the Chicago Association of Realtors, said in a statement the ordinance would allow routine rent increases to become legal disputes. Landlords would have to withhold cost increases driven by rising insurance and utility costs, as well as property taxes, out of fear of paying a hefty relocation fee. 

The draft ordinance uses four times the U.S. Department of Housing and Urban Development's Small Area Fair Market Rent for relocation costs, and the organization provided an example of the total cost of all tenants in a building with three two-bedroom units refusing a rent increase:

• Humboldt Park, $12,240
• West Englewood, $15,840
• Lincoln Park, $21,360

Benedetto argues that smaller housing providers are particularly vulnerable and that ownership will increasingly shift toward larger institutional operators with deeper legal and financial resources. 

“The biggest risk is Chicago repeating costly mistakes we've seen in larger coastal cities: more litigation, more condominium conversions, less supply, higher operating costs, and fewer housing providers willing to invest in rental housing,” Benedetto said in a statement. 

Pratt said the larger roadblock for housing affordability is that the city simply does not build enough housing. 

In 2025, Chicago built roughly a fourth as many new housing units per capita compared to peer cities like New York, Los Angeles, Houston and Phoenix, according to an analysis by A City That Works. The city was last among its peers in 2024 and then saw its new construction rate fall even further this past year. 

With sufficient new supply in a market, older housing stock gradually becomes more affordable — a process that has become “broken” as overall supply is diminished, Pratt said. Now, the city is seeing higher-income tenants than usual renting from lower down in the quality spectrum.

Johnson’s latest proposal comes two years after he started his tenure on shaky footing with the industry after a failed attempt to increase the transfer tax on property sales over $1M in early 2024, months after he took office. In a press conference shortly after voters shot down the measure, he vowed the fight wasn’t over and said he would be “punching back.” 

The mayor has made some advances to win over the business community, like his Cut The Tape initiative to streamline the development process and the continuation of former Mayor Lori Lightfoot’s LaSalle Street conversion program. He also appointed real estate veteran Ciere Boatright as the commissioner of the Chicago Department of Planning and Development, a widely popular move. 

But Johnson’s renters bill could kick the nest again.

Chicago’s multifamily stock is tight. Its 5% vacancy rate is among the lowest among major cities across the country and is more than 350 basis points below the nationwide average of 8.5%, according to Cross Street. 

Peak Properties partner Mike Zucker said the ordinance will have the opposite of its intended impact on affordable housing and pointed to cities that have implemented rent control as proof of the effects. 

“The people who it's going to scare the most are the institutions, because institutions and very high net worth individuals, the big check writers, they want certainty,” Zucker said. “If there's no certainty, that money will not be coming to Chicago.” 

Pratt said the irony is that Chicago has had strong rent growth, which is what gets investors interested in the city, but is ultimately what this bill hopes to curtail. 

“In some way, shape or form, this is another risk premium rate,” Pratt said. “It's a sign again that the political climate is not really going to be conducive.”