2021 BOISE IDAHO REAL ESTATE BLOG
COVID-19 Considerations for Landlords and Property Managers Main Treasure Valley Life

As people shelter and isolate inside in an attempt to flatten the curve, COVID-19 poses unique challenges for landlords and property managers worldwide.

These are challenging times to say the least, with businesses closing their doors, paychecks being put on hold, and government-mandated shutdowns placing a far-reaching damper on the economy at large. The intent isn’t to harm businesses, however quashing the coronavirus is creating unintended consequences across our sector, leaving all parties scrambling for solutions.

Here we’ll look at what landlords renting their home and property managers can do in these troubling times, plus the measures that different countries and governments are taking in regards to tenant security.

Coronavirus: Renters need to be protected from eviction 

Under the best of circumstances, landlords, tenants, and property managers find themselves focusing on ways to cover obligations while ensuring that lease terms aren’t breached. Now that a global pandemic has taken over, governments have stepped in to protect renters from eviction. Outside government orders, there are a few common threads to consider when analyzing lease language and looking into provisions:

Retail operating hours: Retail locations often include required hours of operation. Tenants should notify their landlords if they opt to close for health and safety reasons, or if they are closed by government order. It’s quite likely that force majeure provisions will prevent default, but landlords and property managers should seek communication with tenants regardless. 

Surrender obligations: If a tenant’s lease ends during the coronavirus pandemic, they may consider removing furniture and other belongings and vacating the premises, but force majeure and new legislation may also prevent landlords from taking action. 

Force majeure provisions: When tenants are unable to meet their obligations due to strikes, government actions, acts of God, and other causes that fall outside the scope of the tenant’s reasonable control, it is likely that they are covered by force majeure provisions. Emergency measures such as shutdowns in response to COVID-19 aren’t always covered by force majeure, however governments are taking specific steps to protect tenants from eviction when payment obligations cannot be met.

What property managers should be doing

There are similarities and differences in the ways governments are protecting renters from eviction worldwide. At the same time, companies are often eligible for relief, easing the financial sting being caused by the coronavirus. 

UK renters protected from eviction for three months

In the UK, private renters are protected by emergency legislation that will stay in place for three months. Housing associations may not evict tenants when they fall behind on their rent, but once the three-month milestone passes, tenants and landlords will have to come to an agreement concerning repayment. In England and Wales, government guidance asks landlords to “show compassion” and allow tenants to stay in place whenever possible. Most commercial landlords will have loss of rent cover as part of their property insurance, but Portico estate agents suggest many residential  or ‘accidental landlords’ don’t have a rent guarantee in place, which will leave them in a tough situation financially. 

At the same time, property owners may benefit from a mortgage holiday that suspends payments for up to three months; the scheme unfortunately advises landlords with buy-to-let loans to contact their banks if they encounter problems paying their mortgages. 

American renters still face uncertainty 

In the US, various states have taken action to help keep renters in their homes, and small business grants aim to assist businesses affected by lost revenue. Solutions are piecemeal at best, with some locales taking more extensive action than others. In Los Angeles, for example, an executive order has frozen evictions and tenants may have up to a year to catch up on rent. 

In a city plagued by persistent homelessness, the eviction moratorium allows many to breathe sighs of relief. The absence of a nationwide eviction ban leaves many more US citizens wondering what will happen next. 

Property owners including landlords may see some relief as well. Another proposition aims at protecting Los Angeles property owners by ordering banks to suspend mortgage foreclosures and late fees for the duration of the crisis.

Australian landlords encouraged to show leniency 

In Australia, discussions surrounding how best to approach the issue of banning evictions are ongoing. The government urges landlords to show leniency when tenants cannot afford to pay their rent, and there are calls for a complete ban on evictions similar to bans enacted in the UK and France. 

Meanwhile, mortgage-holders are encouraged to contact their banks if they are facing financial difficulty. Big banks across Australia are acting on a case by case basis, deferring mortgage payments, waiving charges, reducing loan amounts, suspending interest, plus not to mention, landlord/tenant disputes. 

Canadians receive emergency aid 

April 1st saw Canadian Prime Minister Justin Trudeau revealing plans for an $82-billion aid package destined to support Canadian citizens and businesses impacted by COVID-19. Citizens will receive direct support to help with rent and basic living costs, but only in the amount of $900 bi-weekly for up to 15 weeks. 

With Rent Jungle claiming average rents sit at $1400 in Montreal and $2,200 in Toronto, the money will certainly help – but might not be enough to cover rent completely, let alone other costs.

There is no national freeze on rent in Canada, but provincial governments haven’t ruled it out completely. In the meantime, many rental boards are suspending eviction hearings unless they deal with health and safety. Manitoba is an outlier; the provincial government is looking at ways to reduce pressure on tenants and landlords alike, but stresses the importance of having parties work together to come to an agreement.

Landlords and property managers continue their efforts in the face of uncertainty 

Property managers and landlords are on the front lines, working not only to accommodate renters, but to deal with everyday emergencies while people shelter in place. There are new demands in multi-family and multi-tenant buildings well, with more measures being taken to clean and sanitize highly trafficked areas, install more hand sanitizing stations, and work to oversee common spaces to ensure that social distancing requirements are met. 

Grayson Gill, COO of property management at CBRE sums up the unique role that landlords and property managers will play in recovery whether or not rent is paid for the time being, saying “This will pass. People will want to get back to work and we’ll support them in that effort.”

 
Posted by AndrewS at 8/26/2020 12:26:00 AM
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