A survey of landlords in 10 cities across the United States shows rent collection was down significantly in 2020, and an increasing number of owners have a large share of their portfolio behind on rent.
The survey was conducted by researchers from the Bloomberg Harvard City Leadership Initiative, the Harvard Joint Center for Housing Studies, and the Housing Initiative at the University of Pennsylvania.
Smaller and mid-sized landlords are experiencing more significant financial strain, while larger landlords are exhibiting greater business adaptability, the survey shows.
Some highlights of the 50-page report on rent collection, done from February through April of 2021.
- The share of landlords collecting 90 percent or more of yearly rent fell 30 percent from 2019 to 2020.
- Ten percent of all landlords collected less than half of their yearly rent in 2020, with smaller landlords (from one to five units) most likely to have tenants deeply behind on rental payments.
- While instances of severe non-payment grew the most for mid-sized owners, small owners had the highest exposure to deep tenant arrears because they were more likely to face this challenge prior to the pandemic.
- In each of the study cities, “we observe three- to fourfold increases in the proportion of landlords owed 10 percent or more of charged rent by 2020’s end,” the researchers said.
- A larger share of landlords in the coastal cities of the sample reported being owed 50 percent or more of charged 2020 rent.
YieldPro.com reported that “the researchers sent out nearly 60,000 questionnaires to landlords in 10 cities and received just under 3,000 replies. The majority of the respondents were small landlords, with 66 percent owning one to five rental units, 17.2 percent owning six to 19 rental units and 17.2 percent owning 20 or more rental units. Only 22 percent of respondents reported owning apartment buildings (defined as five or more units per building).
“The majority of landlords managed their own properties, with only 28 percent stating that they used a property management company. Most landlords who responded have market-rate properties, with only 21 percent saying that they have at least one renter using Section 8 vouchers,” YieldPro.com said.
The researchers also said owners of all sizes adjusted their practices during the pandemic, with dramatic increases in the share of landlords granting tenants rent collection extensions or forgiving back rent.
Many owners also deferred maintenance to their properties, and those facing challenges around non-payment were more likely to list their properties for sale.
Renters of color have disproportionately borne the negative impact of landlord decisions during the pandemic, as rental properties in communities of color were more likely to be moderately and severely behind on rent in 2020.
The 10 cities in the survey were Akron, Ohio; Albany and Rochester, N.Y.; Indianapolis, Ind.; Los Angeles, Calif.; Minneapolis, Minn.; Philadelphia, Pa.; Racine, Wis.; San Jose, Calif.; and Trenton, N.J. The researchers said, “While these municipalities were chosen with an eye towards achieving geographic spread, we caution that our sample is not necessarily representative of all cities in the U.S. Nonetheless, our sample of survey cities resembles the universe of U.S. cities along several dimensions.”
“Our findings show that small owners had the highest exposure to rental non-payment both prior to and during the pandemic, but mid-sized owners saw the largest increase in non-payment. These findings highlight the preexisting financial precarity of small property owners, as well as the tenuous financial position of mid-sized owners in 2020.
“Our limited sample size and response rate, coupled with a dearth of information on property owners from national sources, makes it difficult to assess the representativeness of our respondents relative to all owners in our markets, as well as the generalizability of our findings to owners nationally.
“Of the pandemic’s many important lessons, one is that we still know little about who owns rental properties and how these owners behave. Thus, the results of our paper are critical to filling this gap, but should be considered in concert with other local and national owner studies.”
The full 50-page report can be found here.