Landlords getting squeezed between tenants, lenders

NEW YORK (AP) – When it comes to sympathetic figures, landlords aren’t exactly at the top of the list. But they, too, have fallen on hard times, demonstrating how the coronavirus outbreak spares almost no one.

Take Shad Elia, who owns 24 single-family apartment units in the Boston area. He said government stimulus benefits allowed his hard-hit tenants to continue to pay the rent. But now that the aid has expired, with Congress unlikely to pass a new package before Election Day, they are falling behind.

Heading into a New England winter, Elia is worried about such expenses as heat and snowplowing in addition to the regular year-round costs, like fixing appliances and leaky faucets.

Elia wonders how much longer his lenders will cut him slack.

“We still have a mortgage. We still have expenses on these properties,” he said. “But there comes a point where we will exhaust whatever reserves we have. At some point, we will fall behind on our payments. They can’t expect landlords to provide subsidised housing.”

The stakes are particularly high for small landlords, whether they own commercial properties, such as storefronts, or residential properties such as apartments. Many are borrowing money from relatives or dipping into their personal savings to meet their mortgage payments.

Demonstrators hold signs as they listen to speakers against evictions in Richmond. PHOTO: AP

The big residential and commercial landlords have more options. For instance, the nation’s biggest mall owner, Simon Property Group, is in talks to buy JC Penney, a move that would prevent the department store chain from going under and causing Simon to lose one of its biggest tenants.

At the same time, Simon is suing the Gap for USD107 million in back rent.

Michael Hamilton, a Los Angeles-based real estate partner at the law firm O’Melveny & Myers, said he expects to see more retail and other commercial landlords going to court to collect back rent as they get squeezed between lenders and tenants.

Residential landlords are also fighting back against a Trump administration eviction moratorium that protects certain tenants through the end of 2020.

At least 26 lawsuits have been filed by property owners around the country in places such as Tennessee, Georgia and Ohio, many of them claiming the moratorium unfairly strains landlords’ finances and violates their rights.

Apartment dwellers and other residential tenants in the United States (US) owe roughly USD25 billion in back rent, and that will reach nearly USD70 billion by year’s end, according to an estimate in August by Moody’s Analytics.

An estimated 30 million to 40 million people in the US could be at risk of eviction in the next several months, according to an August report by the Aspen Institute, a nonprofit organisation.

Jessica Elizabeth Michelle, 37, a single mother with a seven-month-old baby, represents a growing number of renters who are afraid of being homeless once the moratorium on evictions ends.

The San Francisco resident saw her income of USD6,000 a month as an event planner evaporate when COVID-19 hit. Supplemental aid from the federal government and the city helped her pay her monthly rent of USD2,400 through September. But all that has dried up, except for the unemployment cheques that total less than USD2,000 a month.

For her October rent, she handed USD1,000 to her landlord. She said her landlord has been supportive but has made it clear he has bills to pay, too.