‘At this point they’re just abusing us,’ one landlord told NR. ‘And it’s some version of slavery to me.’
One of Raj Sookram’s tenants stopped paying rent in December. Another man hasn’t paid him a cent in 20 months. He now owes Sookram over $20,000.
One woman stopped paying this spring, Sookram said, then demanded that he fix her hot water heater when it blew. That ended with city officials threatening Sookram with daily fines.
In all, Sookram said, about half of the tenants living in his 13 Rochester, N.Y., rental properties are behind on rent. Sookram said he’s struggling to pay his bills and taxes. He’s had to take out loans and work side handyman gigs to provide for his wife and three kids.
As the coronavirus pandemic drags on – and as the federal government continues to extend its legally dubious eviction moratorium – more and more people are “jumping on the bandwagon, like, ‘Oh, I don’t have to pay you,’” Sookram said.
The problem has been exacerbated by the extremely slow distribution of $46.5 billion in emergency rental assistance approved by Congress in late 2020 and early 2021. And as some leaders in the real estate and rental industries have pointed out, that money wasn’t even enough to cover the $57 billion in unpaid rent due at the end of last year. They peg the likely total due today at over $70 billion, and growing.
This leaves small landlords like Sookram in a tough spot. While there has been great focus on the plight of downtrodden renters, there continues to be noticeably less concern about the impact of eviction moratoriums on struggling property owners.
“Where am I supposed to come up with this money to take care of everybody?” Sookram asked. “What am I supposed to do with the very few that are paying me when something breaks for them? Should I tell them that I can’t fix their problem because I took the money to take care of people who refuse to pay rent?”
Overdramatizing an Eviction Crisis
The expiration of the Center for Disease Control and Prevention’s eviction moratorium last weekend sent Democratic lawmakers into a panic. They fretted about a looming eviction crisis, pointing at the more than 11 million people living in rental housing across the country who are behind on rent and could soon be thrown into the street by heartless landlords. Missouri congresswoman Cori Bush, a member of the progressive “Squad” who once was homeless after an eviction, camped outside the U.S. Capitol to protest the expiration of the moratorium.
Feeling the pressure from the Left, President Joe Biden on Tuesday agreed to extend a more targeted moratorium another two months, while openly questioning the constitutionality of the move. A day earlier, Gene Sperling, a top Biden advisor, insisted that the president had “double, triple, quadruple checked,” and found no legal authority to extend the moratorium, which now includes threats of jail time and fines of up to $500,000.
The administration seems to be betting that they can work out the kinks in the rental assistance money pipeline before the courts have time to shut down the eviction ban.
Landlords and rental industry leaders who spoke to National Review said the threat of a massive eviction crisis has been overdramatized. Yes, there are millions of Americans behind in their rent, and yes, some evictions are inevitable. But the eviction process is very expensive, and can often drag out for months, even years. Courts already are backlogged, meaning that even routine evictions will take longer than normal. It usually makes more financial sense to work with residents than to evict them. And if tenants leave, or are kicked out, the property owners likely will not be able to collect rental assistance from the government for that tenant, no matter how much they are owed or how good their reason for evicting.
“There’s incentives all the way through this to keep people in housing,” said Bob Pinnegar, president and CEO of the National Apartment Association.
When the eviction moratorium does eventually come to an end, property owners will be reluctant to evict tenants who communicated with them in good faith, worked out payment plans, and applied for government assistance, Pinnegar said. On the other hand, people who “ghosted” their landlords – meaning they stopped paying rent, stopped responding to emails and letters, and actively avoided contact – likely won’t be given the same benefit of the doubt.
“There will be some evictions,” Pinnegar said, “but I think the conversation about millions of people being evicted, and homeless centers being overrun, and people on the streets, it’s a great exaggeration that I think unfortunately is driving public policy.”
The biggest problem at the moment, Pinnegar said, is the failure to distribute federal rental assistance money. The New York Times reported this week that of the $46.5 billion that Congress has approved so far, only about $3 billion has actually been distributed.
Pinnegar points the finger at the decentralized nature of the program, which has been farmed out to about 400 entities — state and local governments, nonprofits — with few controls over how the money is delivered. Some of those local programs are putting restrictions on the money that Congress didn’t intend, Pinnegar said. Some allow landlords to apply for money with the okay of their tenants, while others require the tenants to do the heavy lifting.
The program needs to be streamlined and standardized to a level of base functionality, he said.
Ultimately, Pinnegar said, Congress needs to pump more money into the program, which he believes already is underfunded by about $25 billion. And the longer the eviction moratorium lasts, the more that debt will continue to grow.
“If there’s going to be a tsunami of anything, there’s a tsunami of debt out there,” he said.
In late July, the National Apartment Association filed a federal lawsuit to recover damages on behalf of rental providers who’ve suffered losses under the CDC’s eviction moratorium. Ideally, Pinnegar said, industry and government leaders would work together to fund the gap, but he’s doubtful. “I just don’t think that Congress cares about this issue enough to provide another round of funding,” Pinnegar said.
‘They’re Just Abusing Us’
Landlords and property owners who spoke with National Review said they want the eviction moratorium to end. But more important, they said, is for the federal money to start flowing.
“Get us the money. I don’t have a problem with the guy staying,” Sookram said of his tenant who hasn’t paid in nearly two years. “I just want my money to pay my bills. That’s all I want. I want to be paid so I can carry on the business.”
“Unless you are selling drugs and destroying the property, I don’t have a problem keeping you.”
Joe LaBarbera, who also owns rental properties in Rochester, N.Y., said the landlords he knows work with their tenants when times are tough. Most of his tenants have been able to keep up with their rent, but he’s had a couple that have fallen behind, he said.
“I do not want to kick anybody out of their home,” LaBarbera said. “I have some tenants who have been slow to pay, and I always work with them. Because, look, you’re dealing with families, you’re dealing with people with kids. These are real life people. It’s not about numbers. No landlord likes to deal with evictions. Nobody does.”
Lincoln Eccles, who manages a 14-unit family-owned building in the Crown Heights neighborhood of Brooklyn, compared the current scenario – the government banning evictions, but also not expediting payments to landlords who’ve been waiting for over a year – to slavery.
“At this point they’re just abusing us,” he said. “And it’s some version of slavery to me, forcing people to work and produce a product for free, and there’s no compensation.”
Eccles said he has several tenants behind on rent, including one woman who owes him more than $40,000. In addition to the nonpayers, New York City’s rent stabilization laws and high taxes force him to operate some of his units at a loss, he said. He’s way behind on his utility bills and property taxes. He’s signed leases he normally wouldn’t to scrape together enough money to replace his 116-year-old building’s boiler before the weather starts getting cold. He said he’s operating on “handshake credit.”
“I’m holding my nose because I need money for these boiler guys,” Eccles said.
He’s worried about his taxes, which he describes as a “super crisis that’s about to hit me.” While the government has forced him to keep providing services, in some cases without compensation, there’s been no temporary forgiveness of his tax bill.
“If the local government turns around and is this vindictive, aggressive monster, and comes after me, they could topple me over,” Eccles said. “And they’ll do that to a bunch of us smaller owners where we’re struggling, and all we have enough is to keep the lights on.”
Hanging On by Their Fingernails
Some of the landlords and property owners who spoke with National Review said they have tenants who refuse to work with them, and refuse to apply for federal aid. They said they should still be able to get federal assistance whether the tenant cooperates or not.
“Every other business was just, ‘Here’s this money. Stay afloat,’” Eccles said. “Property owners, they are forcing some of us to fail. Those like me are just hanging on by their fingernails.”
Stephanie Graves, who has an ownership stake in five apartment complexes in and around Houston, Texas, also does third-party property management, said that even some of the tenants who do apply for federal assistance are getting caught up in bureaucracy.
“We have some residents that owe us $12,000,” she said, “and we’ve been playing follow-up with these rental assistance programs: ‘The application’s pending. Okay, wait, we sent a check. Okay, we sent it to the wrong place. Oh, wait, we sent it to the resident. Oh, no, we didn’t send it to the resident.’”
Graves said that overall it’s a small number of her residents who aren’t paying rent, but she operates on small profit margins, so even a small number of nonpaying residents can have a big impact. In one of her buildings, three of her 14 tenants aren’t paying, she said. In that building it takes nine tenants paying in full for her to afford her payroll, taxes and insurance. That doesn’t leave much wiggle room to turn a profit, or for anything else.
In one of her buildings, she’s been unable to replace a $6,200 pool pump. “I can’t afford to pay that because I’ve got $27,000 in delinquent rents,” Graves said.
She also worries about the long-term impact of the eviction ban. For many smaller landlords who rent out single-family homes, the rents they collect are their sole source of income. With interest rates low and real estate prices soaring, there’s a great incentive for those landlords to sell their properties now, likely reducing the nation’s affordable rental stock.
“Why wouldn’t you do that,” she asked, “rather than fight this process of residents who aren’t paying or can’t pay?”