While headlines are saturated with concerns about a new wave of homelessness in Los Angeles, another side of the story is less covered — the struggles that landlords have been enduring since the start of the COVID-19 pandemic. Amid all the worry about renters being unable to pay back rent, it’s easy to forget that landlords are also caught in a financial quagmire, left to cover the cost of property maintenance, taxes, utilities, and mortgage payments without a stable income stream.
The Heavy Toll of a Three-Year Burden on Landlords
The Never-Ending Moratorium Cycle
The eviction moratorium, first introduced as a protective measure during the COVID-19 pandemic, has taken on a life of its own, extending for nearly three years. While the policy might have been commendable during the initial stages of the pandemic when its impact on public health was severe and uncertain, its protracted nature has placed a significant financial strain on landlords. Many of us have essentially been subsidizing housing without a clear exit strategy, all while facing our own mounting bills and responsibilities. The primary question that arises is: How long is too long? A temporary safety net has transformed into a long-term burden for landlords, who are continuously forced to bear the cost without a definite end date.
The Fog of Financial Planning
Adding to the burden is the indefinite nature of these extensions. The lack of a concrete termination date for the moratorium has made financial planning virtually impossible for landlords. This level of uncertainty has resulted in a precarious situation where many landlords find themselves unable to make informed decisions. Can they afford to refinance properties, make necessary repairs, or even pay their own residential expenses? All these are crucial questions left unanswered, leading to reactive rather than proactive financial management.
The Disparity in Governmental Support
Lastly, while tenants have had the support of various relief packages, landlords have been left largely to fend for themselves. This is especially true for small-scale landlords who may not have the financial cushion or diversified portfolios that larger property management companies possess. Government relief funds aimed at supporting renters indirectly aid landlords by covering back rent, but the scope of these programs is often limited, and many landlords find themselves ineligible or stuck in bureaucratic red tape. The net effect is a large number of landlords dipping into personal savings or taking on debt to keep their properties afloat, all while receiving little to no income from them.
Financial Strain of Being a Landlord
The Multi-faceted Role of Landlords
Contrary to the popular misconception that landlords merely sit back and collect rent, the role is far more complex and financially taxing. Landlords are, in effect, small-scale entrepreneurs managing what amounts to a business. They are responsible for the general upkeep of the property, including regular maintenance and unexpected repairs. Landscaping costs can be a regular seasonal expense, and utilities in common areas are another ongoing charge. Additionally, landlords have to bear the burden of property taxes, which are often high and subject to increases. And let’s not forget mortgage payments—many landlords are still paying off loans for the properties they own. When you add it all up, landlords have a lot of out-of-pocket expenses that they are expected to cover, often without any income to offset them due to the eviction moratorium.
The Forgotten Smaller Landlords
Smaller landlords, often those with just one or two properties, have been disproportionately affected by the financial strain the moratorium has imposed. For these individuals, the rent they collect isn’t “extra money”; it is often their primary source of income or a crucial part of their retirement plan. They don’t have the financial buffer that larger property management companies might have, and so every month without rent hits them particularly hard. Their financial stability is directly tied to the rent they collect, and without it, many are on the brink of financial ruin.
Mounting Debt
The eviction moratorium has not only paused immediate payments but has also accumulated a considerable backlog of unpaid rent that landlords are owed. With the city agreeing to a deadline for all back rent to be paid, landlords are hopeful yet cautious. They have been waiting for this moment but are realistic about the likelihood of receiving all unpaid rent in one lump sum. Months or even years of unpaid rent make for a large, often unaffordable, bill for many tenants. For landlords, this means that while a solution is theoretically in sight, the practicality of tenants being able to pay back such large sums all at once remains to be seen.
A Missed Opportunity for Collaboration
The Case for Flexible Payment Plans
One of the most glaring missed opportunities in the city’s handling of the eviction moratorium was the lack of provisions for flexible payment plans. Many landlords were willing to work directly with their tenants to negotiate reduced rents or installment-based payment plans that could be adjusted according to the tenant’s financial situation. Such a measure would have allowed for some cash flow to sustain landlords while providing tenants a more manageable way to handle their rent obligations. Instead, the city imposed a hard moratorium that effectively halted any such bilateral negotiations, leaving both parties in an increasingly dire financial situation.
The Untapped Potential of Alternative Solutions
Another overlooked avenue was the possibility of alternative housing solutions for those who genuinely could not afford to pay rent. The city already had models like hotel programs designed to temporarily house homeless individuals, which could have been expanded or modified to include renters in financial distress. Such a program would have relieved some pressure from landlords and tenants alike, allowing for a more balanced approach to the housing crisis exacerbated by the pandemic.
The Consequences of Inflexible Policymaking
The city’s decision to opt for a one-size-fits-all eviction moratorium has resulted in a situation where neither landlords nor tenants have any good options. Without considering more nuanced approaches, the city has set the stage for the current crisis, affecting both parties adversely. The rigid policy has painted both landlords and tenants into corners, from which there are increasingly fewer ways to escape unscathed. Had policymakers engaged in more thoughtful planning that involved stakeholders from both sides, a more amicable and sustainable solution could have been reached, possibly preventing the looming wave of evictions and financial collapses we’re currently facing.
The Upcoming Crisis: A Double-Edged Sword
The Looming Surge in Homelessness
As the August 1 deadline for back rent approaches, there are widespread concerns about a sharp increase in homelessness, an issue that affects not just the individuals facing eviction but the city’s social fabric as a whole. Social services, already stretched thin, would face further strain, and the overall quality of life in the city could decline as homelessness becomes even more prevalent. While landlords do not wish to contribute to the homelessness crisis, they face their own financial crises that may leave them with no option but to evict non-paying tenants.
The Paradox of Financial Stability Through Eviction
For many landlords, eviction may sadly become a necessity for financial survival, a last-resort option to regain some form of stability. The long-standing moratorium and the lack of financial assistance from the government have left landlords in a precarious situation. They are caught between the ethical implications of contributing to a rise in homelessness and the practical necessity of reclaiming their properties to restore some income stream. This predicament places landlords in a morally and financially complicated position, one that many would prefer to avoid but may find inevitable.
A Future Crisis: The Next Wave of Homelessness in 2024
While the deadline already poses severe challenges, landlords and tenants may be looking at another crisis point in February 2024. At that time, back rent from October 2021 to January 2023 will come due, potentially launching another cycle of financial strain and evictions. This continuing wave of financial hardship suggests that the current policies have only kicked the can down the road rather than providing any sustainable solutions for landlords or tenants. The prospect of recurring crises adds another layer of stress and uncertainty for all involved parties, complicating efforts to find long-term solutions.
Conclusion
While tackling homelessness is crucial, the conversation needs to extend to include landlords who have also been suffering. Policies need to be more balanced, taking into account the practical realities that landlords face. A more collaborative approach between the city, renters, and landlords could have mitigated the current crisis, and it’s time we explore such paths forward.
