The Day Of Reckoning For Outstanding Rent Payments Is Upon Us
Ellen Calmas is Co-Founder/EVP at Boston-based Neighborhood Pay Services, creator of the NPS Rent Assurance Rent From Payroll platform.
What a difference a year makes. According to a recent Census Bureau survey, an estimated 10 million apartment dwellers have struggled to stay current on their rent payments while approximately 16 million individuals are left without the resources to pay back rent that will still be owed once the new CDC moratorium on evictions is lifted in July. That’s a full 12 months since the first renter protections were put in place and a lifetime of change for property owners. After meeting the challenges of upgrading buildings for improved safety and managing their own high-stress financial obligations, landlords of all sizes are justified in asking to be paid.
Thanks in part to the immense efforts of organizations like the National Multifamily Housing Council and the National Apartment Association that represent the majority of professionally managed rental units across the U.S., $21.55 billion in emergency rental assistance funding was approved through The American Rescue Plan Act of 2021. These funds combine with $25 billion approved as part of the second stimulus package passed in December 2020.
Clearly, $40-plus billion in aid is a lot of money but, regrettably, not nearly enough. Estimates by chief economic experts at Moody’s Analytics and the Urban Institute show average delinquent balances of $5,600 per renter household with rent outstanding for four or more months. Since the first lockdowns of 2020, outstanding balances are now estimated to exceed $70 billion. That means that federal assistance has the potential to cover only two-thirds of the rent that is currently owed. The remainder of approximately $23 billion in current outstanding balances needs to be collected from residents who may carry debts for years to come.
Without question, the rental housing industry has stepped up in huge ways to address renter humanitarian needs while managing around the delay of billions of dollars in rent payments and forgoing standard recourse. Although companies acted out of necessity as much as choice, they all shared the expectation — both legally and morally — that rent obligations would be fulfilled after government restrictions were lifted. So now with the very real prospect of federal and local funds for rental aid available to millions of individuals who owe money, questions arise about how, and how quickly, renters will be able to access those funds, and how, and how responsibly, they will elect to work with the property companies that have carried their outstanding balances and kept them housed for so long.
Throughout the country, I’ve seen property staff working diligently to learn the ins and outs of what their residents need to do to qualify for rental aid in their jurisdictions. They’re providing guidance on websites and forms with targeted efforts to help residents navigate what it takes to correctly submit requests for government relief. This assistance is especially important to the current renter/landlord dynamic since relief requests have to be signed by the individual but submitted by the landlord. Moreover, since requests for resources can only be submitted for those individuals who are still residing in the units where money is owed, working collaboratively is a win-win for all parties, provided aid doesn’t take too long to be processed. Of note, renters need to recognize that relief funds will be sent directly to landlords to reduce a portion of outstanding balances, but in the majority of cases will not cover all of what will be owed.
To address the additional money that rent relief won’t cover, many property companies are implementing standardized outstanding balance extension initiatives to provide people with more time to get caught up. Our work with several leading property companies on these initiatives requires residents to enroll in proven rent budgeting programs like our own that are linked to direct deposit from employer payroll at a level and pace residents can manage based on income. An automated and assured process provides safeguards for funds to flow toward rent and outstanding debts each month. By providing a road map for retaining housing and protecting rental and credit history, many unsung heroes in property management are still fighting the good fight to help their residents recover financially from the turmoil created by Covid-19.
The day of reckoning in rent payments is upon us. The challenge is to get residents to start planning now on how to get out of debt. The requirement for a quid quo pro between landlord and renter seems honest and just. The hope now is that renters see the situation in the same light and grab hold of the lifelines being offered.
For more information on applying for rental aid, individuals should first contact the business office where they live for assistance in filing necessary forms. Their community may not have all the answers, but most are working hard to help residents navigate required paperwork and many local agencies have also sprung up to offer assistance. The following websites provide details on how to access rent aid:
• The National Council of State Housing Agencies State HFA Emergency Housing Assistance Programs
• The National Housing Conference Covid-19 Housing Resource Center
In my home state of Massachusetts, where concerns run deep about the ability for many renters and landlords to survive until the estimated $800 million or so in federal funding is actually distributed throughout the commonwealth, concerns about timing and red tape abound. The sooner individuals get started speaking with their rental communities about payback plans and their efforts to file for aid, the sooner the reckoning — and recovering — from outstanding rent obligations can begin.