For the first time since I've been a landlord, I haven't wanted to look at the year-end figures for any of my properties. Why? Because I know they won't be as good as last year's pre-pandemic figures were. That's depressing news for any small-business owner. I'm not alone.
The JCHS survey
A survey of over 2,500 landlords of rental properties in 10 cities conducted by the Joint Center for Housing Studies (JCHS) at Harvard University has determined how COVID-19 impacted landlords' businesses. The survey sheds light on how rental property owners have been managing the financial strain they've been under from tenants who haven't been able to make rent payments.
- The main finding is that landlords' rent collection was down significantly in 2020 compared with 2019. The share of landlords who collected 90% or more of rent fell from 89% to 62%. Also, 9.1% of landlords received less than half of the rent owed, up from 2.9%.
- The amount of landlords who needed to modify their business practices by granting rental extensions increased from 15% to 48%, and the landlords who deferred maintenance on their properties increased from 5% to 31%.
- Charging late fees declined from 23% to 12%, and increasing the rent declined from 30% to 9%.
- There was a 15% increase in landlords missing a mortgage, utility, and/or property tax payment in 2020.
- There was a positive relationship between nonpayment of rent and property sale listings: Landlords who listed their rental property for sale increased in 2020 to 13%, a 10% increase from the prior year.
- Small and midsized landlords (landlords with fewer than 20 properties) were hurt more than larger landlords.
- Nonpayment of rent was up disproportionately in lower-income neighborhoods where the majority of renters were people of color.
This study comes from the halls of academia -- Harvard -- and there was apparently an agenda, namely this: "The need for current housing responses to be centered around and proactively promote racial equity."
Here's a clue as to how the authors of the study suggest achieving this goal: When mom-and-pop landlords are forced to sell because of tenant nonpayment of rent, this presents, as the study says, "An opportunity for localities to actively broker the sale and purchase of these properties … [and] could also serve as an opportunity of localities to provide subsidy support." In other words, a possible city power grab.
The reason the authors state a need for housing equity is from study findings that landlords were more likely to take "punitive actions" against renters of color -- namely collecting late rental fees, evicting, and practicing a lack of rental forgiveness.
The authors state in the survey that landlords who received only 50% of rent or less during COVID-19 were mostly landlords of lower-income properties. According to the National Low Income Housing Coalition, many low-income renters were behind on rent even before the pandemic.
Landlords typically aren't as willing to work with tenants who have a history of late or missed payments, period. Plus, there's already a system in place to curtail discrimination: The Fair Housing Act makes it illegal for landlords to discriminate -- meaning they can't treat some people differently than others based on seven protected classes -- of which color is one.
The Millionacres bottom line
This survey was best when it stuck with the facts regarding the effects of COVID-19 -- and the government response to it -- on landlords. These facts are important for landlords and society in general to learn and understand.