As 2021 comes to a close, the conversation around housing across North...Read more
The short answer to the question is yes. Property Owners and Landlords...Read more
During the pandemic, a lot of front-page news measured and discussed the impact of stay-at-home orders on small business owners mainly in the retail, tourism, and food industries.
But how have rental property owners been impacted? With widespread job losses in 2020, what has the financial impact been to those who own/operate rental properties?
Most coverage is about discussing housing shortages, the minimum wage not meeting inflation growth or housing costs, and many other very important factors that have contributed to the issue of access to housing. But what hasn't made a lot of headlines is how legislative action that serves to protect tenants can impact independent landlords.
"Ya, big deal" you think...
Yes. That's the mindset of most. But let's look at the data - shall we?
We've noticed that much of the coverage paints the independent landlord in a negative light - insinuating that property owners don't have a right to the rental income their families rely on. Our question is this: did banks get pressure to suspend mortgage payments? Did collection agencies get pressure to suspend activities? Did major credit cards forgive outstanding balances? The answer to those is no. The little guy (property owner & small business owner) was left to shoulder the TRUE IMPACT of massive job loss, while big business went on as usual.
The fact of the matter is that most US landlords did the right thing during the pandemic. A study by the Joint Center for Housing Studies at Harvard University surveyed over 2,500 rental property owners in ten cities across the US and found out the dramatic increase in rent forgiveness that landlords have done (at their own expense).
Here's a summary of their findings:
The fact of the matter is that property owners suffered major financial losses in 2020, some losing their entire business because of rent owed due to massive job losses and stay-at-home orders.
When forced with extenuating circumstances, the vast majority of property owners stepped up to the challenge and adapted in the best way to help their tenants.
It's not all good news, however. The study also found that there continues to be bad actors in low-income communities. Property owners in these communities acted much differently than their peers during 2020. Rental properties in communities of color were more likely to be severely behind on rent in 2020, and these landlords were more likely to take punitive actions against these tenants in the form of late rental fees, evictions, and lack of rental forgiveness.
Combine all of the above with a strain that the pandemic has placed on the housing market AND affordability within minimum-wage earners, and you truly have a crisis unfolding. But landlords aren't to blame.
According to the Census Bureau’s Household Pulse Survey, nearly one in five US renter households were behind on rent by late December 2020, fueling a rent arrears crisis estimated to range between $7 - $57 billion.
To assume that this shortfall belongs on the backs of property owners is callous and unfair, to say the least. As the above study showed - most property owners and landlords have done the right thing and collected partial payments or have forgiven owed rent. But of course, that trend is not sustainable. Adding to this pressure, the study reveals that it's the little guys that are feeling the squeeze. 8-10% percent of small property owners (1-5 units) reported being owed 50% or more of charged rent by 2020’s end compared to only 3% percent of larger landlords. So while rent arrears were up for landlords of all sizes in 2020, small and mid-sized landlords were operating under more dire financial conditions relative to larger ones.
All this to say, 2021 has seen a leveling out of these impacts as more and more tenants have returned to work. The crisis is far from over, and remember that the enemy isn't property owners! To assume that small business owners can cover these massive losses is an abject failure of policy-makers.
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