Philadelphia apartment operating costs are shaped by a set of city-specific charges that owners elsewhere in Pennsylvania do not face: a rental license billed per unit, lead-safe certification for older buildings, Philadelphia Water Department charges that include a stormwater fee based on property area, and the Business Income and Receipts Tax on rental income. Add real estate tax at 1.3998% of assessed value, utility rate changes from PGW and PECO, and private trash collection for larger buildings, and the result is an expense profile that has to be built line by line.
This guide covers each of those items with the rates and rules published by the City of Philadelphia, the Water, Sewer and Storm Water Rate Board and the Pennsylvania Public Utility Commission. Where a rate changes yearly, the year is noted.
Rental licensing and compliance fees
Every rental unit in Philadelphia that is not owner-occupied needs a rental license from the Department of Licenses and Inspections. According to the city’s rental license page, the fee is $69 per dwelling unit, capped at $27,830 per license, under a fee schedule that took effect January 1, 2025.
The license must be renewed every year. A renewal more than 60 days late adds a charge of 1.5% of the license fee for each month since expiration. To obtain or renew a license, the owner must be current on all city taxes and have no open L&I violations, and a multi-unit building needs proof of legal occupancy such as a certificate of occupancy. Licenses do not transfer, so a buyer must obtain a new one after closing.
Owners who do not live in the building also need a Commercial Activity License and must file the Business Income and Receipts Tax, discussed below.
A per-unit example
For a hypothetical 24-unit building, the rental license costs 24 times $69, or $1,656 a year. The cap of $27,830 only matters for very large properties; it is reached at about 404 units.
Certificate of Rental Suitability and the tenant handbook
Before a new tenancy begins, the landlord must obtain a Certificate of Rental Suitability from L&I, issued no more than 60 days before the tenancy starts and only once all required licenses are in place. The landlord must also give each new tenant the city’s Partners in Good Housing handbook, currently dated September 22, 2025. These requirements apply to new leases rather than renewals, so high-turnover buildings handle them more often.
Lead-safe certification for pre-1978 buildings
Philadelphia’s Lead Disclosure and Certification Law, as amended by Bill No. 180936-A, requires every rental unit built before 1978 to have a lead-safe or lead-free certificate in order to obtain or renew a rental license. The requirement applies whether or not children live in the unit, with an exemption only for exclusive student housing. It was phased in by zip code starting October 1, 2020 and has covered the entire city since April 1, 2022.
Key points for budgeting:
- A lead-safe certificate is valid for four years, so it is a recurring inspection and testing cost.
- A lead-free certificate does not expire, which can make abatement worth considering for buildings the owner plans to hold.
- The tenant receives a copy at lease signing, and certificates are uploaded to the Health Department’s lead certification system.
- Without a valid certificate, the owner cannot renew the rental license and may be unable to pursue an eviction while the violation is pending.
Because the rule covers every rental unit built before 1978, it is a standing line item for owners of older buildings rather than an occasional cost.
Building safety standards that drive maintenance budgets
The Partners in Good Housing handbook summarizes property maintenance rules that translate directly into operating costs:
- Heat: buildings with two or more units must keep apartments at 68°F from October 1 through April 30, unless tenants control their own heating equipment.
- Hot water: must be supplied between 110°F and 125°F.
- Fire extinguishers: at least one 1-A:10-B:C extinguisher in each unit, with a service tag dated within the last 12 months.
- Fire alarm systems: must be inspected, tested and certified every year by a qualified contractor.
- Smoke alarms: in non-sprinklered multi-unit buildings, in-unit smoke alarms cannot be battery-powered.
Façade and fire escape inspections
For taller buildings, L&I’s structural certification program requires façade inspections for buildings six or more stories tall or with a structure over 60 feet. The first inspection is due within 10 years of completion and then every five years. Fire escapes and balconies also need periodic inspection, with repairs completed within six months. If a façade is found unsafe, the owner must protect the area within 24 hours, apply for permits within three days and start work within 10 days, which can produce sudden capital costs.
Philadelphia apartment operating costs for water, sewer and stormwater
Water and sewer can be a large utility line for apartment owners who pay them, and Philadelphia’s rates are rising on a schedule. In a July 23, 2025 decision, the Water, Sewer and Storm Water Rate Board approved base-rate revenue increases of $60.92 million effective September 1, 2025 and $54.0 million effective September 1, 2026. The board estimated that a typical residential bill, at 430 cubic feet a month, would rise from $81.77 to $89.42 in the first year and to $94.31 in the second, increases of about 9.4% and 5.5%.
Under the final rates filed for September 1, 2026, the first-tier water charge is $78.54 per thousand cubic feet, made up of a $73.13 base and a $5.41 surcharge, and sewer is $57.09 per thousand cubic feet, including a $7.56 surcharge. The surcharges fund the Tiered Assistance Program for low-income customers and are reconciled each year, so they can move independently of base rates.
How stormwater is billed
Stormwater is where apartment buildings can differ most from single-family homes. The Philadelphia Water Department’s stormwater billing page explains that property type follows the use recorded by the Office of Property Assessment, not zoning. Residential properties pay a flat monthly stormwater charge, while non-residential properties are billed on their actual area. As of September 1, 2026:
- Residential: $20.89 a month plus a $2.16 billing charge.
- Non-residential: $1.003 per 500 square feet of gross area plus $7.048 per 500 square feet of impervious area, plus a $2.81 monthly billing charge, with a minimum of $20.89 a month.
- Condominiums: billed as non-residential, with the charge split equally among water accounts.
For a property billed on area, a large parking lot or roof can make stormwater a meaningful expense. As a hypothetical, a parcel with 40,000 square feet of gross area, of which 30,000 is impervious, would pay about $80 for gross area and about $423 for impervious area each month, plus the billing charge, or roughly $6,070 a year. Owners should check how their parcel is classified on their bill.
Gas and electric rate changes
Philadelphia Gas Works is the city’s natural gas utility and PECO delivers electricity in the city, and both have had recent rate actions.
PGW
On October 9, 2025, the Pennsylvania Public Utility Commission approved a PGW rate settlement that raised base rates by $62 million, about 9.3%, for service from November 28, 2025, compared with the $105 million PGW had requested. The PUC estimated the average residential bill would rise from $92.60 to about $98.70, and the residential monthly customer charge went from $16.25 to $17.25. Owners who heat with central gas boilers absorb these increases directly.
PECO
The PUC approved a PECO settlement in December 2024 that raised electric distribution revenue by $354 million and gas by $78 million. A residential electric customer using 700 kilowatt-hours a month saw bills rise from $135.85 to $149.43 in 2025 and by a further $2.70 to $152.13 in 2026. PECO filed new rate cases in March 2026 and withdrew them in April 2026, so no new distribution increase is scheduled from that filing.
The supply portion of the bill changes separately. On June 1, 2026, PECO’s residential Price to Compare rose from 11.024 cents to 11.572 cents per kilowatt-hour, an increase of about 5%, and the PUC expected the small-business price to rise by more than 14%. Common-area lighting, elevators and master-metered buildings are exposed to both components.
Trash collection for larger buildings
The city’s Department of Sanitation collects trash only from properties with six or fewer units. Buildings with more than six units, other than qualified condominiums and cooperatives, must hire a private hauler for trash and recycling. For a mid-size apartment building, that makes waste collection a contracted expense rather than something covered by property taxes.
Taxes that show up in operating budgets
Real estate tax
Philadelphia’s real estate tax is 1.3998% of assessed value, made up of 0.6159% for the city and 0.7839% for the School District. The rate has not changed since 2016, and the city has said it expects to keep it the same for 2027. Payment is due March 31.
The Office of Property Assessment revalued more than 580,000 properties for tax year 2027, with notices mailed from June 29, 2026. The first-level review deadline was September 1, 2026 and the Board of Revision of Taxes appeal deadline was October 5, 2026. New values take effect January 1, 2027, with bills mailed starting December 1, 2026. The $100,000 Homestead Exemption applies only to owner-occupied homes, so it does not reduce taxes on investment apartment buildings.
Business Income and Receipts Tax
The Business Income and Receipts Tax applies to residential rental activity, and owners must file even if the property shows no profit. The rates have two parts, a tax on gross receipts and a tax on net income:
- Tax year 2024: 1.415 mills on gross receipts and 5.81% of net income.
- Tax year 2025: 1.410 mills and 5.71%, due April 15, 2026.
- Tax year 2026: 1.395 mills and 5.65%, filed in 2027.
The $100,000 receipts exclusion ended starting with tax year 2025, which means small landlords who were previously exempt from the gross receipts portion now owe it. The city’s long-term plan phases out the gross receipts portion and lowers the net income rate to 2.8%.
As a simple illustration of the gross receipts portion, a building with $600,000 of rental receipts in tax year 2026 would owe $837 at 1.395 mills, before the net income portion is calculated.
Use and Occupancy tax on commercial space
Residential rental space is not subject to Philadelphia’s Use and Occupancy tax, but commercial space in a mixed-use building, such as a ground-floor storefront, is. The rate is 1.21% of the assessed value of the commercial space. Landlords collect it from tenants and remit it monthly by the 25th. The $2,000 annual exemption expired on December 31, 2025, so the first payment without it was due January 25, 2026.
Tenant protections with cost implications
Two sets of tenant rules affect administrative and turnover costs. The Renters’ Access Act, in effect since October 13, 2021, requires landlords to provide written screening criteria before collecting an application fee, to give rejected applicants the reasons and any third-party reports within three business days, and not to reject applicants based on credit score or eviction records alone. Violations carry fines of up to $2,000 each.
City Council passed the Safe Healthy Homes Act in April 2026, and Mayor Cherelle Parker signed it on May 7, 2026, with an effective date of November 1, 2026. It requires good cause to end or not renew a lease of any length, strengthens retaliation protections and allows tenants to recover rent collected while a unit lacked a rental license or Certificate of Rental Suitability. The fiscal year 2027 city budget also funds a proactive rental inspection program, under which L&I plans to inspect licensed rentals on a rotating five-year cycle. Two landlords filed a federal lawsuit challenging the legislation, and as of May 2026 the case had not been resolved.
Building a realistic Philadelphia expense budget
Putting the pieces together, a Philadelphia apartment budget should include several lines that owners from other cities may overlook:
- Licensing and compliance: $69 per unit for the rental license, the Commercial Activity License, Certificates of Rental Suitability for each new lease and lead-safe recertification every four years for pre-1978 buildings.
- Life safety: annual fire alarm certification, extinguisher servicing and, for buildings of six or more stories, façade inspections every five years.
- Water, sewer and stormwater: rates that rose in September 2025 and again in September 2026, with stormwater tied to parcel area for non-residential accounts.
- Gas and electric: a PGW base-rate increase from late 2025 and PECO supply prices that moved in June 2026.
- Private trash: a contracted cost for any building with more than six units.
- Taxes: real estate tax on the 2027 reassessed value, BIRT on rental receipts and net income, and Use and Occupancy tax on any commercial space.
A sample of fixed city charges
To show how the city-specific items add up, consider a hypothetical 24-unit building with average rent of $1,500 a month, a tax year 2027 assessed value of $3 million and a ground-floor shop assessed separately at $200,000:
- Rental license: 24 units at $69, or $1,656 a year.
- Real estate tax: $3 million at 1.3998%, or $41,994 a year.
- BIRT gross receipts portion: $432,000 of annual rent at 1.395 mills, or about $603, plus the net income portion, which depends on the building’s profit.
- Use and Occupancy tax on the shop: $200,000 at 1.21%, or $2,420 a year, collected from the commercial tenant.
These figures leave out water, energy, trash, insurance, payroll and repairs, which vary widely by building. Even so, they show that real estate tax dominates the fixed city charges, while licensing and the gross receipts tax are small by comparison, which makes the tax year 2027 reassessment the item most worth checking when setting 2027 budgets.
Running these figures through an NOI calculator before setting rents or evaluating a purchase helps show how much of gross income is absorbed by city-specific costs. For statewide context, see our Pennsylvania markets page, and owners considering a sale can read about selling an apartment building in Philadelphia on our city page.
