HOW GOVERNMENT OVERREACH DURING THE PANDEMIC HARMS RESIDENTS
We’ve all read or seen the news lately. The multifamily industry has been turned on its head by the coronavirus pandemic. Residents and management alike have been scrambling to find new ways to make everyday life work. In the midst of all of this, the legal landscape seems to have become the new wild west. Local, state, and federal governments/agencies have imposed eviction moratoriums. Even when moratoriums are not in place, some judges have simply decided that following the law is not their priority right now. In the view of the general public, these developments, which have sometimes denied landlords recourse when a tenant cannot pay rent, probably play well. Over the long term, though, these shortsighted half-measures are likely going to prove significantly harmful to the very people they are designed to protect.
At our core, all apartment owners and all management companies are housing providers. We want to lease apartments, and once a tenant is there, we want them to be able to keep their homes. When something unexpected happens like the COVID-19 pandemic, we have every incentive to work with residents who are trying their best to get by. After all, aren’t late rent payments better than a mass exodus of people who can’t afford their rent? Working with people isn’t just the right thing to do – it pays off! In our experience, very few residents that we have worked with and who have done all that they can to seek help have been unsuccessful. Even in those cases, we do all that we can to try to minimize the long-term impact on those tenants.
Still, we see cases where residents attempt to take advantage of the circumstance. When an apartment gets leased, the cost of that lease figures in all of the anticipated costs the apartment owner will incur over the term of that lease. All of these calculations rely on having a recourse – eviction – if a resident does not pay rent. When the legal climate changes and allows residents to remain in an apartment without paying, the costs of doing business change. Long term, government overreach barring eviction can have several ill effects, and pricing is far from the only thing that may be affected. At Cornerstone, and probably at many other management companies across the nation, we cannot ignore that what has happened in this crisis may happen again. It is very possible that the response to this pandemic forever changes the way we do business.
For example, sometimes through no fault of their own, residents find themselves in a situation where they aren’t able to make good on a lease. We have always had a second chance leasing policy to try to help people who need it. But, when we do not have recourse to evict a nonpaying resident, policies like this wind up being abandoned. We will only be able to accept the most financially strong candidates for a lease. The same applies when people apply who have strong employment histories but are presently between jobs. Here again, without recourse to eviction if rent winds up not being paid, there is no way to consider these prospects a candidate for a lease.
Unless the government begins providing direct rental assistance to residents who have fallen behind because of COVID-19, good people are undoubtedly going to find themselves getting further behind on rent than they can hope to catch up on. That’s a shame, not just because they will wind up displaced from their homes, but because landlords (having been burned by government overreach once before) may very well tighten their leasing criteria to ensure the financial strength of their tenant profiles. Will those displaced have access to the same quality of housing that they did before? That remains to be seen, but I personally doubt it.
Hopefully, Congress will step up and do the right thing. Don’t upset rental markets by forcing housing owners to recalculate the cost of leasing due to loss of recourse to eviction – help people pay their rent. I encourage everyone who can to call or write their representatives to express their concerns. Stay safe and healthy!