Since the beginning of the pandemic, property owner Matthew Haines said he has lost a quarter of a million dollars in rental income from tenants who did not pay him rent.
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“I’ve never woken up having panic attacks before this year,” said Haines, 53, who owns and manages 253 rental units in the Dallas area through his firm Tangent Group. “All of this is because we can’t control and run our business.”
He worries about providing for his family, keeping his employees and whether he should sell the buildings and single-family homes he owns, which have been his livelihood for 27 years, he said.
Like many property owners with tenants who haven’t paid rent during all or part of the pandemic, Haines was looking forward to the end of the federal eviction moratorium that was put in place by the Centers for Disease Control and Prevention to help prevent the spread of the coronavirus. But after it expired at the end of July, the CDC issued a new eviction moratorium focused on areas experiencing an elevated spread of coronavirus, which covers about 90% of renters, including the area where Haines’ properties are located.
The CDC said that evicting people could be detrimental to public health and would interfere with efforts to slow the pandemic.
“I’m thoroughly disgusted with it,” he said of the new moratorium, which is in place until October 3. “It is an infringement on my rights as a property owner.”
Haines said he isn’t looking to evict all his non-paying tenants. But he makes a distinction between those who can’t pay and those who won’t. It’s only the latter, he said, he wants out of his buildings.
“We’re not kicking people out who can’t pay,” he said. “We’re removing people who refuse to pay.”
He said he currently has about eight people out of 253 units who refuse to pay. Haines said he thinks either these tenants have the means to pay or they could receive rental assistance but haven’t applied. “They haven’t paid in six months to a year. We’d finally be able to do something about that.”
Haines said landlords like him have done what was asked of them, shouldering the burden of housing millions of people who lost income during the pandemic and fell behind on rent.
“But every time we think maybe we can get to the other side, they move the goal posts and change the rules,” he said. “I want to run my business. I want to feed my family. I can only do that for so long under these conditions before we end up in a situation where we are failing financially.”
Whiplash for landlords
When Dawn Pfaff, a landlord with properties in New York and Florida, heard a federal eviction ban was coming back after expiring last month, she said it filled her with “dread.”
Pfaff said she thinks allowing a person to live in someone else’s property for six months to a year for free, while someone else has to pay the taxes, insurance and maintenance, is a violation of the law and unconstitutional.
The notion that the moratorium is not legal is hotly contested. Court cases have been decided both for and against the moratorium and other cases have yet to be decided. Also, the moratorium does not erase the rent owed.
But most landlords in the US are like her, so-called “mom and pop” landlords with a handful of properties who are counting on rents for their income or to fund retirement.
“I didn’t buy stocks and I don’t have a lot of retirement saved,” said Pfaff, who also works as a real estate agent and runs other property-related businesses. “Our whole plan is to get our mortgages paid off and live off rentals as our retirement income.”
While she said most of her tenants have kept up with rent during the pandemic, she said she did sell a 65-unit mobile home park in upstate New York last December, partly because it had become so cumbersome to evict tenants with recent changes to tenant laws in the state prior to the pandemic.
“There are so many people like me who have tenants that can’t pay,” Pfaff said. “And their hands are tied.”
News of the latest eviction moratorium just days after the previous one had expired was “whiplash” for landlords, according to Greg Brown, senior vice president of government affairs for the National Apartment Association, an industry group of property owners.
“We were disappointed to see we were going back to it after we had agreed that it was ending,” he said. “Now we have a whole new metric and landlords are asking how they follow this and trying to figure out how to comply.”
Unlike the prior ban, the new protection is more limited, targeting areas hardest hit by the coronavirus. It protects renters in areas with “high” or “substantial” transmission of Covid-19 based on the CDC’s tracking of the virus.
But even though court challenges to the new moratorium are being filed, Brown said his association is telling owners that they need to hold off on evictions for non-payment of rent and that they need to work with tenants to get rent relief.
There are, he said, some places where judges are interpreting the moratorium differently. In Franklin County, Ohio, for example, judges announced they would not enforce the new rule banning evictions.
Following the renewed eviction moratorium, the municipal court in Franklin County, which includes Columbus, announced it “will not follow the eviction moratorium order issued by the CDC,” because of a prior court of appeals ruling that found the CDC lacked the authority to issue the national moratorium, according to a statement. The court is “legally required to follow that Court’s decision and will accept and process eviction filings,” the statement said.
But, Brown said, there are substantial penalties for violating the order. “Landlords aren’t going to risk having to face those.”
With the updated eviction moratorium, many property owners, Brown said, are likely to run the numbers on losing an additional two months rent.
“They are figuring out how to cover 60 more days,” he said. “What is the new math for how much they can recoup from rental assistance?”
Unable to pay vs. refusing to pay
When the pandemic hit, Haines knew it would be a blow to the low-income residents in his units, where a one-bedroom apartment rents for between $800 and $900 a month, Haines said. He said he dropped late fees and moved everyone to a month-to-month lease, looking to ease the burden of breaking a lease if they could no longer afford the rent.
But when local moratoriums on eviction were followed by the national ban, he found that few people left.
He said he is doing what he can. Haines currently has 24 renters that are behind on their rent, 17 of them owe more than $1,000 total. Late fees are still dropped for those working to get rental assistance and renters still struggling can remain on a month-to-month lease without the standard 10% to 20% premium to do so, he said.
The majority of his tenants who are behind on rent, want to pay but aren’t able to and are doing what they can to resolve their back rent, he said. He and his staff are reaching out to residents, making sure they are aware of the federal emergency rental assistance program and helping them to apply.
One of his residents, he said, lost income but is working to pay what she can and applied to receive some of the $46 billion in rental assistance.
“She’s behind about $6,800,” he said. “But I’m not kicking her out over that. We’ll get through it with her.”
The bigger issue, he said, are renters who refuse to pay.
“We have not filed for eviction on anyone who is working with us,” he said. But he has evicted residents who violated the terms of the lease.
Like the resident who he said earns $80,000 a year, which is within the individual income limit of $99,000 to be eligible for the CDC eviction moratorium. But when the moratorium went into effect, Haines said the tenant sublet part of the apartment while living there, pulling in $1,500 a month for herself and withholding rent from Haines.
Since the moratorium only protects tenants from eviction for non-payment of rent, Haines was able to remove her for what he described as breaking the terms of her lease.
There are also residents who refuse to apply for rental assistance, he said. In order to be protected by the CDC moratorium, tenants must sign a declaration that they have made a good faith effort to pay and apply for government assistance.
He’s also seen at least two residents manipulate the rental assistance program by applying for relief money at multiple addresses, with inaccurate contact information, or by arranging to have the checks go directly to them without handing the back rent to him. And he said he still is not able to evict them.
But, compared with other independent rental owners, Haines considers himself fortunate so far. He and his wife have been conservative with their finances. Still, the rent shortfalls have halted their ability to save for retirement and they needed to inject cash to make sure they didn’t have to lay off any of their 10 employees.
The losses this year have also forced Haines to change his screening criteria for new residents by looking more closely at past rental payment history, which he said, “hurts the very people – lower income – that the government says they are trying to help.”
Haines said as long as his residents are willing to work with him, he’ll do everything he can to keep them housed.
“I will not boot people who are trying to do the right thing,” he said of his residents. “We can sustain it for a couple more months, but we shouldn’t have to.”