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The topic is on all of our minds.
The COVID-19 pandemic has caused governments and businesses across the world to take urgent measures to protect public health and ‘flatten the curve’ to slow down the spread of the virus. The only way to do this is social distancing and self-isolation. Unfortunately, these measures have resulted in the temporary, but rapid, slowdown or shutdown of many businesses, a decline in global markets, and resulting layoffs or reduced hours for many employees. This will have an unsettling effect on the rental market very soon, but hopefully will only be a short-term situation.
Many tenants are concerned that they will not be able to pay their rent on April 1st, and are sorting through the news to figure out what options are available to them. Many landlords are concerned that, if tenants cannot pay rent, they will not be able to make their monthly mortgage payments and other bills, and they are uncertain how to proceed. While governments continue to announce freezes on eviction proceedings and are offering financial aid, the information is scattered and can be overwhelming and confusing.
To get a better understanding of what landlords and tenants are most concerned about and need help with, Naborly surveyed 5387 renters, and 778 landlords across North America on March 25th.
Our conclusion? Everyone is worried, and everyone wants to be able to work cooperatively to minimize financial hardships and maintain their basic needs.
Almost two-thirds of tenants reported that their income has been affected by COVID-19, and more than three-quarters of tenants reported that they are worried they will be unable to pay their rent over the next six months.
We received a lot of suggestions from tenants about how governments can offer assistance during this difficult period, including eviction freezes, subsidized rent, and expedited and simplified processes for accessing employment insurance and financial aid. Some governments have already implemented such measures, but the majority of tenants surveyed are unaware of how to apply for financial aid from the government to assist with rent payments.
We also received suggestions from both tenants and landlords alike about how they can work together to ease the burden of this difficult period.
For tenants, helpful options from landlords include reduced rents, flexible payment plans, and accepting reduced or partial rent or property improvements in lieu of rent. Many tenants surveyed expressed concern over cleanliness and proper social distancing in common areas of buildings, and their ability to access groceries and other necessities while in social isolation.
For landlords who are primarily concerned with the sufficiency of their cash flow to make mortgage payments and decreases in property values, their requests from tenants are to be proactive in seeking alternate means of income in order to pay rent, whether through government financial assistance, loans, or family and friends, or alternatively to pay whatever their means allow or request a flexible payment plan. Some landlords were open to suggestions from tenants regarding property improvements that could be made in lieu of rent. Equally, however, many landlords responded to our survey that they were concerned for the health and wellbeing of their tenants and wanted to ensure they stayed inside.
In this climate, if we could offer advice to landlords and tenants across North America, it would be to start a conversation as soon as possible to create healthy and transparent line of communication.
Tenants: if you are worried about your ability to pay rent, be upfront and honest with your landlord. Offer information about your situation and see if they would be willing to accept a deferred or partial rent payment.
Landlords: reach out to your tenants to see if they anticipate issues with upcoming rent payments. Express empathy for the difficult circumstances in which they likely find themselves, but explain the financial concerns you have as well. Let them know you are staying as up to date as possible with government programs available to them and offer to connect them with details about the application processes for such programs. As much as possible, be flexible and open to working on a solution if they are able to keep you objectively updated on their financial status. Recognize also that it may be difficult to find a replacement tenant at the rent you are charging given the current market, so it may be in your interest to continue with your current tenant.
We are encouraged to see that almost half of landlords have already opened a dialogue with their tenants about the implications of the COVID-19 outbreak on their relationship. We hope that trend continues. This situation impacts all of us, and all of us have an interest in ensuring the continuity of existing positive landlord-tenant relationships and ensuring financial stability.
At Naborly, we believe that housing issues can be solved by doing what is right for the collective. In furtherance of that, and in light of the survey results, we have posted a few questions on our Facebook page for landlords and tenants to answer and share their insights with each other.
In addition, links can be found below for Canadian tenants and landlords who are in need of financial assistance and this article does a good job explaining how the newly implemented Canada Emergency Response Benefit (CERB) will provide additional financial relief to all Canadians who have stopped working due to COVID-19. It is important to note that online applications to apply for CERB will become available early April, with more updates to follow.
Businesses are also able to apply for wage subsidies that will cover up to 75% of wages. More information regarding wage subsidies for businesses can be found in this article.
We recognize for some tenants and landlords, such assistance may be insufficient. If an agreeable solution cannot be found between the tenant and the landlord, a landlord may be required to terminate the lease. For most, however, it is important to remember that the best outcomes for both tenants and landlords come from working together in a transparent humane way to figure out agreeable terms. We are entering an uncertain world, and the rental market will be better off if tenants and landlords act cooperatively.
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