“It creates a nightmare”: Agents and landlords are reluctant to issue a new eviction ban

Tenants in the US were exempt from possible evictions on Tuesday thanks to a new federal moratorium, though a number of real estate professionals feared the new rule could endanger mom and dad landlords and ultimately bite renters themselves.

On Tuesday afternoon, two days after the expiry of the often extended moratorium of 2020, the news of the eviction ban became known. Like its predecessor, the new moratorium was enacted by the U.S. Centers for Disease Control, although it was more limited in scope and focused only in parts of the U.S. where high rates of COVID-19 infection are recorded. However, some estimates suggest this could ultimately affect 90 percent of tenants in the country.

The new moratorium came after intensive lobbying work by both tenant representatives and some democratic legislators.

Eric Eickhof

However, a number of real estate professionals feared the law could adversely affect both tenants and property owners. Eric Eickhof, a Minneapolis agent who also has a portfolio of more than 500 single-family homes, told Inman the original moratorium made sense as there were real economic concerns earlier during the coronavirus pandemic. All the time later, however, the economy seems to be recovering and the worst predictions have not come true.

“Overall, I don’t think that’s necessary,” said Eickhof about a new moratorium. “And it creates a lot of fear and uncertainty in an industry that is the backbone of the economy. “

With evictions out of the way, some landlords are likely to find themselves “between a rock and a hard place,” according to Vicki May, who owns Westurban Management, a Chicago area property management company. May said Inman that if property owners fail to receive rents, they will not be able to maintain properties or eventually pay mortgages. This in turn can lead to foreclosures that neither benefit the owner nor the tenant.

Vicki May

“It’s not very good for them either,” she said.

May and Eickhof both said the vast majority of tenants in their properties continued to pay rent during the COVID-19 outbreak. In some cases, however, tenants have stopped paying while still working. The result is concerns that eviction moratoriums are being abused by tenants who may not know that they will eventually have to pay.

“It increases their debt,” May said. “They will only owe more money and so many of them cannot afford what they already owe.”

“People don’t think about the long-term consequences of not paying rent,” added Eickhof, “and how that will affect their creditworthiness and their ability to rent spaces in the future.”

Sean Reilly

Other industry experts raised additional concerns. For example, Sean Reilly – a Keller Williams agent in the Orlando area who owns two rental apartments – said he had to adjust the rents he had collected during the pandemic. And he added that he has no plans to evict tenants struggling during last year’s crisis and to attribute his own losses to the risk of owning rental apartments.

But he also said a moratorium only delays the need to actually address the problem.

“I think it has to be tackled at some point and you can’t push it any further,” he said. “It creates a nightmare. At some point you have to come to terms with it. “

The result of this situation, according to several agents who spoke to Inman for this story, is that some real estate investors are giving up and preparing to sell. Tiffany McQuaid – who owns McQuaid & Company of Naples, Fla. – said Inman this is a conversation several agents from her brokerage firm have had with clients recently.

Tiffany McQuaid

“You hear from some of their owners, especially those who carry more rents, that they want to get rid of them and sell them,” McQuaid said. “It was just too inconsistent with their ability to generate any type of income.”

McQuaid went on to say that her Florida area’s economy performed comparatively well during the pandemic, with businesses such as restaurants flourishing in some cases. But despite the local nuances of the situation, the property owners are “completely tied”.

“The landlords say forget it, we can’t do this anymore,” she added. “So many just threw up their arms.”

The concept of landlords selling their properties is unlikely to be popular in many parts of the United States in general.

But the real estate industry members who spoke to Inman also found that many landlords are still moms and dads, despite stereotypes about corporate bosses.

“I think people forget that,” said Eickhof. “You look at the big landowners and the big landowners. But that’s the minority. The majority is a bunch of little contemporaries who depend on their rent. “

May said she is aware of cases where landlords are dependent on rents and face their own possible evictions on the street because they have no way to pay for their own apartment.

“In Cook County, about 70 percent of landlords are private individuals or small businesses,” May added.

The National Association of Realtors (NAR) made a similar statement. In a statement to Inman on Tuesday evening, the trading group said that “around half of all housing providers are mom and pop businesses, and they also have problems.”

“Without rental income, they can neither pay their own bills nor maintain their properties,” the statement continues.

NAR argued in the statement that “rent assistance paid directly to housing providers” would be a better policy solution, and that such assistance is “now available in every state to meet bills up to a year and a half later and in the future”. . “

“No housing provider wants to evacuate a tenant and regards this only as a last resort,” the statement said.

From what NAR said, as well as from the conversations Inman had for this story, ultimately, some members of the real estate industry believe that there are better ways to address the ongoing challenges in the rental market. And while it remains to be seen what will ultimately happen when the eviction moratoriums are finally lifted, the issue is likely to be a cause for concern for at least the next few months.

“People are getting more and more worried,” May concluded. “The longer it goes, the bigger the problem.”

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