Landlords And Tenants Face Difficulty Making Ends Meet With Mortgages And Rent

Landlords mortgages are a challenge in this time of the pandemic as renters have trouble making ends meet

As the pandemic stretches into its sixth month, renters and landlords face difficulty making ends meet with rent and mortgage payments, according to a nationwide survey conducted by Avail,  in August, 2020.

Smaller landlords in particular, many of whom are retired and rely on rental income, are having a hard time.

Due to the increase in partial rent payments, landlords are feeling financial pressure to pay their rental mortgages on time. Thirty-five percent of landlords surveyed by Avail, a technology platform for small landlords, gain 50 percent or more of their income from rental properties.

The survey included responses from 2,225 landlords and 2,919 renters with. Like renters, the majority of landlords currently reside in California (17.1 percent), with Illinois (7.9 percent), New York (6 percent), and Florida (5.9 percent) following.

Landlords face difficulty and going into forbearance

With inconsistent rent payments due to COVID-19, 12 percent of surveyed landlords face difficulty and went into forbearance. Concerns over renters not being able to pay rent in the future (24.9 percent), as well as trouble paying for their mortgages due to some renters not paying their rent (18.9 percent), were the top reasons landlords gave for going into forbearance.

The questions in this survey were developed with the input of researchers in the Urban Institute’s Housing Finance Policy Center.

Landlords face difficulty and forbearance can help so here are the factors

Struggling renters lead to struggling landlords

According to the survey, 64.2 percent of renters who responded stated the main challenge they have faced in paying rent is due to a loss of employment or reduced income during July.

In August, 60 percent agreed while 61.9 percent said another challenge was balancing paying rent and other regular expenses. This is cited despite the majority of renters being employed and working 30 hours or more during the time of their survey response.

In order to make monthly rent and mortgage payments, both renters and landlords are increasingly looking to their savings, ways to borrow from friends and family willing to lend funds, and government aid for help.

Landlords who faced difficulty took these actions to help

Landlords face difficulty and are looking to their savings accounts or emergency funds for help with covering expenses related to their rental properties during the pandemic. Of those who responded, 35 percent said they were using savings or emergency funds to cover the payments, while 21 percent said instituting a rent payment plan or deferment option for their renters helped.

More than one-third of landlords are retired

From the survey, Avail also found that 36 percent of landlord respondents are retired.

This paired with landlord respondents commonly reporting that they are using savings to continue mortgage payments on their rentals illustrates the financial pressures some landlords are facing during the pandemic.

According to surveyed landlords, 54.2 percent think the income made from their rental properties will continue to remain the same in the next three months.

Roughly 30 percent think this form of income will decrease in the coming months, while only 15.1 percent of landlords said they believe it will increase.

“One renter has lost a job in the oil field and is working a lower-paying temporary job. Another renter, a single parent with no child support, has changed jobs in the past two months,” said a landlord in Texas in the survey, giving reasons as to why landlords are looking to decrease their rent.

“Ultimately, a tenant losing a job to the COVID-19 economic downturn is not something that is necessarily under their control,” said one landlord from Minnesota. “[The] Government has put a lot of pressure on the landlord to assume losses and protect the tenant, which makes for a very challenging situation.”

What landlords made in 2019 before taxes

Some landlord frustrations stemmed from the federal, state, and local governments allowing for some eviction protections on renters while not giving the same measures to landlords that hold mortgages from private companies not covered by CARES Act mortgage forbearance measures.

“It is unsustainable to allow the tenant to not pay but require a landlord to pay a mortgage due,” said a landlord from Maryland. “These decisions appear to be made without due consideration to the relevant factors of sustainment which has caused an unequal distribution of the effects of the impact caused  by the response to COVID-19.”

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