Illinois lawmakers stall housing reforms, but avoid worst bills

Illinois state lawmakers failed to advance bills that would have helped ease housing shortages and reduced costs. Legislators also rejected damaging measures that would have most hurt housing builders and boosted rents and mortgages.

Illinois lawmakers ended their spring session without making meaningful changes that would get Illinois housing back to where it was before the pandemic, but at least they didn’t enact some ideas that would have damaged affordability and availability.

While what passed offered small improvements, broader change is needed if Illinois is going to end its status as the Midwest’s least-affordable housing market.

The best bills didn’t make it

Several bills had the potential to meaningfully improve housing access. They failed to advance.

House Bill 1813 would have stopped local governments from banning additional dwelling units, while still allowing them to regulate design, placement and other features. These coach houses, basement apartments and converted garages expand affordable options without requiring new land or major infrastructure. Additional dwelling units offer low-cost alternatives for seniors, young professionals and lower-income residents while giving homeowners a way to generate extra income. They also encourage social good, such as socioeconomic diversity and allowing older community members to remain in their communities as they age.

House Bill 1814 proposed allowing “light density” housing such as duplexes, fourplexes and townhomes without discretionary approvals if they met codes on residential lots larger than 5,000 square feet in cities with more than 25,000 people. It would have saved time and costs for builders who frequently must apply for zoning changes to build this kind of housing in spite of the need for it in many cities. These modest density boosts help meet demand and lower prices for low- and middle-income families, without changing neighborhood character.

The worst bills also didn’t make it

Housing providers avoided two damaging proposals this session. Neither left its original chamber.

Senate Bill 1728 would have barred landlords from considering a tenant’s credit score when screening applicants, treating it as a protected characteristic similar to race or gender. While the bill may have been aimed at helping applicants with poor or limited credit histories, it likely would have backfired. Removing objective metrics can push landlords to rely more heavily on subjective methods that can result in inadvertent discrimination. Credit scores help assess whether someone is likely to pay rent on time, a reasonable and key concern when entering a lease agreement.

House Bill 3269 would have charged landlords of buildings with five or more units a fee equal to 5% of the difference between their monthly rent and $1,200. The funds would go into a state housing program that offered up to $15,000 in down-payment aid to renters who were cost-burdened for over a year.

Although Illinois currently bans municipalities from enacting explicit rent control, this bill would have had a similar effect. Economists have reached consensus that rent control policies cause more harm than good. The Brookings Institute reports while rent control can sometimes appear to help tenants in the short run, “in the long run [it] decreases affordability, fuels gentrification and creates negative spillover on the surrounding neighborhood.”

By taking an arbitrary cut of rent income above $1,200, this bill would have unjustly fined landlords for operating. It also would have sent public dollars to subsidies that boost demand without addressing the real problem: lack of supply. Burdening landlords with new fees would have made developers less likely to build, worsening the housing shortage.

A couple bills passed with small positives

While no sweeping reforms were enacted, a few minor wins made it through the legislature.

House Bill 1575 eliminates the fee to file a restrictive covenant modification with a county recorder. Racially restrictive covenants were once used to block Black and immigrant families from buying homes in certain neighborhoods. While now illegal to enforce, these contracts still exist in property records. Their removal matters. It’s both symbolic and demonstrative of building momentum toward a more substantial undoing of the full slate of exclusionary housing policies that still affect working families today, such as restrictive zoning laws.

Senate Bill 39 also created a targeted but meaningful exemption. Tiny homes built for veterans are no longer subject to costly electric vehicle charging station requirements. Though this measure helps an important but narrow subset of the population, it’s an encouraging precedent. Rather than throwing more subsidies at a housing problem, it reduced the regulatory burdens that drive up costs. This principle applies more broadly. Restrictions add to the burden of building homes for everyone, not just veterans. Lawmakers should remove this requirement for everyone, and soon.

Looking ahead

Lawmakers return in the fall for the veto session, a time notoriously used to pass major changes with minimal scrutiny. While major housing gains are unlikely in that short window, harmful legislation could resurface.

Illinois needs a long-term commitment to increasing supply and reducing barriers. When they help make housing plentiful, it will be more affordable.