Covid eviction ban forces some owners to sell properties

A federal eviction ban puts pressure on small landlords, who cannot directly access Covid rental relief funds, and some are starting to sell properties to recoup losses.

This will likely reduce the affordable and indispensable rental stock in an already unaffordable housing market.

Congressional Covid relief bills have earmarked more than $ 50 billion in rent relief. But requirements vary by state and even local jurisdictions.

Any request for repair must begin with a tenant. They have to file documents stating that they cannot make payment in order to get the money from the government, which then goes to the owners. The owners cannot apply for it themselves. In some areas they can help their tenants with the process, but in others they cannot.

“So if you find yourself in a jurisdiction that allows you, as a landlord, to work on behalf of your resident, to be a lawyer, to get those funds into their hands as quickly as possible, then you will be much better off. of success, “said Robert Pinnegar, President and CEO of the National Apartment Association.” If you are in jurisdictions that have taken an approach that is not as customer-friendly, it will take longer . “

On Monday, the Centers for Disease Control and Prevention extended the deportation ban until the end of June, as the Biden administration proceeds with the next phase of its plan to eradicate the coronavirus.

The program aims to ensure the safety of tenants. Yet while large multi-family rental companies may offer concessions and face some missed payments, small landlords often cannot.

According to the National Rental Home Council, sixty percent of owners of single-family rental units to whom rent is owed have received the necessary documents from their tenants, as required by the CDC, to receive relief funds.

However, with so many people waiting for help, around a third of landlords said they would be forced to tighten standards when assessing future rental applications, and 11% said they had already been forced to. to sell at least one of their properties.

In today’s housing market, which is seeing tremendous demand and a record number of homes for sale, owner-listed homes are likely to sell to owner-occupiers and evaporate from the rental housing stock. The housing rush caused by the pandemic over the past year has resulted in a decrease in rental stock by more than a quarter of a million units. Rental housing is generally more affordable than home ownership.

“What keeps me from sleeping at night is that we had a housing affordability crisis at Covid-19,” Pinnegar said. “If we lose this critical affordable, natural housing that exists across the country, we’re going to have a disaster on the other side of the story.

Marilyn Blackburn, owner of Washington State for 20 years, has decided to sell her nine rental properties as soon as she can.

“It’s been six months with these tenants and we’ve lost, I think I’m about $ 12,000 so far just in the rents,” Blackburn said. “And you know they don’t let us collect late fees either, so there are a few thousand. [dollars] in late fees too. And again, you have to keep paying the mortgage every month. “

Blackburn said non-paying tenants refused to respond to him. If they don’t fill out the papers for relief, she gets nothing.

“It’s just frustrating. You know people live in my house, take advantage of me, and there’s nothing I can do about it,” she said.

A census survey this month found that 15% of renter 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 next month’s rent. By some estimates, nearly $ 60 billion in rent and fee arrears have been owed since the start of the pandemic.

“You get to a point where you are so far behind that you come in, the world starts to give in on you and you don’t have the desire to try to go through a process which is very difficult and complex to get help. who you need, ”Pinnegar said.

More than half of the country’s rental stock is owned by small landlords, and more than half of those landlords have tenants who missed their payments during the pandemic, according to a new NRHC survey. Of these, more than a third said they had to dip into personal savings or take out a loan to pay off mortgages and maintain their properties.

“The financial difficulties faced by rental housing owners over the past year have created real uncertainty about the direction of the rental housing market, which has only been exacerbated by a myriad of moratoriums on evictions in the country. local, state and federal level, ”said David Howard, executive. director of NRHC. “While rental assistance programs are certainly helpful, for many homeowners it may be too late.”

Steffen Landrum owns several rental properties in Massachusetts. He said he ended 2020 with a deficit of more than $ 10,000 in rent owed, three of four properties forborne and $ 6,500 in utility payment arrears.

“Despite that, I think I’m lucky to hold on. This is mainly due to a few reliable residential tenants and my commercial tenants, ”said Landrum. “Unfortunately, I may have to hit the reset button and sell one if not two properties before this is all done.”

– CNBC’s Lisa Rizzolo contributed to this report.