The uneven recovery from the 2020 recession and ongoing pandemic continues to harm those who are least able to absorb it. Among landlords, small “mom-and-pop” landlords with five or fewer tenants have lost the most in recent months, with one-in-three reporting reduced revenue in 2020, according to the Terner Center.
This follows the federal eviction moratorium that was in place to prevent the spread of COVID-19 from March 2020 through August 2021, when it was struck down by the Supreme Court. Under the moratorium, landlords were unable to evict tenants for nonpayment of rent. For many, this meant losing out on rents with little to no remedies available.
Editor’s note — Here in California, the statewide eviction moratorium ends on September 30, 2021. Then, evictions for nonpayment of rent may begin again, but with additional steps and notices required during the COVID-19 Rental Recovery Period. Read more here.
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Most small landlords are not traditional investors. For example, 43% of mom-and-pop landlords used to live in the home they now rent and 26% plan to move into their rental property at some point. Three-out-of-four mid-size landlords of six-to-ten units consider their rental properties to be an integral part of their retirement plan. In fact, one-in-three mid-size landlords are already in their retirement years.
In other words, mom-and-pop landlords are not wealthy corporations with large reserves. In fact, many are just covering costs while they wait for their properties to appreciate in value. One-in-three mom-and-pop landlords do not make an annual profit, and one-in-five regularly report annual losses.
Therefore, 2020’s reduced revenues were on top of the slim-to-negative margins most mom-and-pop landlords already experience. This loss of income has resulted in landlords resorting to skipping necessary maintenance and allowing their properties to slide into disrepair.
This continued fall-out from the 2020 recession for mom-and-pop landlords is yet another example of the K-shaped recovery occurring across different income classes. Here, large-scale investors are experiencing compounded profits, while those reliant on incomes are seeing revenues fall.
Help for mom-and-pop landlords is available
As landlords find themselves at the end of the eviction moratorium, small landlords may begin to find some relief as they are able to evict nonpaying tenants and begin receiving rents once more.
However, even before evicting tenants and finding new ones to fill vacancies, landlords have some options to receive funds to cover their lost rents.
Landlords seeking relief from nonpaying tenants — and tenants seeking help paying back missed rents — may apply for the Emergency Rental Assistance (ERA) program. Under this program, landlords can be reimbursed for up to 100% of their lost rents.
Landlords are eligible to receive assistance when:
- the tenant’s household is income eligible (the state will calculate this when the tenant applies);
- all payments received need to be used to satisfy the tenant’s unpaid rent; and
- the tenant needs to verify they meet eligibility requirements and sign the application.
The state will send the tenant a notification for the tenant to complete these tasks. Without the tenant’s cooperation to complete the application, the landlord may take steps to evict the tenant beginning October 1, 2021. [Calif. Code of Civil Procedures §1179.11]
To apply, visit Housing Is Key.
