City Life / Vida Urbana organizer Ronel Remy speaks during an “Anti-Eviction and Foreclosure Rally” on October 11, 2020 at the Boston Common Fountain in Boston.
Matthew J. Lee | Boston Globe | Getty Images
A federal ban on evictions is putting pressure on smaller landlords who don’t have direct access to Covid rental aid funds, and some are starting to sell properties to make up for losses.
This will likely reduce the much-needed, affordable rental stock in an already unaffordable housing market.
Covid Relief bills from Congress have earmarked over $ 50 billion in rental relief. However, the requirements vary by state and even local jurisdiction.
Any request for relief must begin with a tenant. They must submit paperwork stating that they cannot make payment in order to receive the government money which will then be passed on to the landlords. Landlords cannot request it themselves. In some areas they can help their tenants with the process, but in others they may not.
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“So if you find yourself in a jurisdiction that allows you, the owner, to work on your resident’s behalf, be a lawyer and get that money in your hand as quickly as possible, you will be much more successful,” said Robert Pinnegar, President and CEO of the National Apartment Association. “If you are in countries that are taking an approach that is not as customer-friendly, it will take longer.”
The Centers for Disease Control and Prevention on Monday extended the eviction ban until the end of June as the Biden government moves on with the next phase of its plan to eradicate the coronavirus.
The program aims to ensure the safety of tenants. While large multi-family landlords may offer concessions and survive some missed payments, smaller landlords often cannot.
According to the National Rental Home Council, 60 percent of single-family homeowners owed return rent received the necessary documentation from their tenants to receive the aid funds, as requested by the CDC.
With so many still waiting for relief, about a third of landlords said they will be forced to tighten standards when evaluating future rental requests, and 11% said they have already been forced to admit at least one of their properties to sell.
In the current housing market, with very high demand and a record number of homes for sale, landlord-listed homes are likely to be sold to owner-occupiers and evaporated from the rental housing stock. The housing construction caused by the pandemic last year resulted in the rental stock falling by more than a quarter of a million units. Rental apartments are usually cheaper than owning.
“The thing that keeps me up at night is that we had a housing affordability crisis in Covid-19,” Pinnegar said. “If we lose this critical, naturally occurring, affordable housing that exists in this country, we will experience disaster on the other side.”
Marilyn Blackburn, a landlord in Washington State for 20 years, has decided to sell her nine rental properties as soon as possible.
Washington State landlord Marilyn Blackburn.
Zach Caby | CNBC
“It’s been six months with these tenants and we’ve lost. I think I’ve only lost $ 12,000 so far,” said Blackburn. “And you know they don’t allow us to make late fees either, so there are a few thousand [dollars] even in late fees. Again, you have to keep paying the mortgage every month. “
Blackburn said the tenants who don’t pay refuse to respond to them. If they don’t hand in the paperwork for the relief, they won’t get anything.
“It’s just frustrating. They know that people live in my house and take advantage of me and there is nothing I can do about it,” she said.
A census poll earlier this month found that 15% of tenant households, or 6.7 million, said they were behind on their rent. In addition, nearly 27% or 11.8 million households have little or no confidence in their ability to pay rent for the next month. Some estimates suggest that nearly $ 60 billion in back leases and fees have been owed since the pandemic began.
“You get to a point where you get so far behind that the world is collapsing inside you and you don’t have the desire to go through a process that is very difficult and complex to get the support you need”, said Pinnegar.
More than half of the rental portfolio in the nation is owned by smaller landlords, and more than half of those landlords have tenants who missed payments during the pandemic, according to a new survey by the NRHC. Of these, more than a third said they needed to dip into personal savings or take out a loan to make payments for mortgages and property maintenance.
“The financial hardship that rental home owners have faced over the past year has created real uncertainty about the direction of the rental market, which has only been exacerbated by countless local, state and federal eviction moratoriums,” said David Howard, executive director of the NRHC. “While rental assistance programs will certainly help, it may be too late for many property owners.”
Steffen Landrum owns several rental properties in Massachusetts. He said he ended 2020 with a rental deficit owed in excess of $ 10,000, three in four lenient properties, and $ 6,500 in arrears.
“Even so, I think I am fortunate enough to hold on to it. This is mainly due to some reliable home tenants and my business tenants,” said Landrum. “Unfortunately, I may have to hit the reset button and sell one if not two properties before it’s all over.”
– CNBC’s Lisa Rizzolo contributed to this report.