Since the beginning of the COVID-19 crisis, members of the Piedmont Triad Apartment Association, who professionally manage more than 70,000 market-rate apartment homes in the Piedmont Triad, have been working extremely hard to serve their residents while also keeping their employees safe. They’ve significantly altered their operations to accomplish this; according to a poll conducted in June by the National Apartment Association (NAA) and the Institute for Real Estate Management (IREM), respondents had assisted 19% of their entire portfolios with rental obligations, including offering payment plan options, waiving late fees and credit card fees, waiving month-to-month lease fees, zero rent increases on lease renewals and moving to electronic payments to accommodate the circumstances created by the pandemic.
Thanks to the assistance provided through the CARES Act, many households throughout our community have been able to pay their bills, including rent, through the initial phases of this crisis. Despite this, however, many households, especially those in lower income brackets, are struggling to meet their basic financial needs, and as the CARES Act assistance expires at the end of July a growing number of people could face increasing economic hardship without more government assistance.
In the face of this uncertainty there has been a call from some in the community for an extension of the eviction moratorium and, in some cases, for rent forgiveness. Our members understand this impulse; they see firsthand the challenges that many of their residents are facing, but simply put, implementing these measures could quite literally collapse the rental housing market and put all renters at risk of seeing a significant decline in the quality of their housing.
Contrary to popular opinion, rental housing providers do not operate with huge profit margins. The average is 9%, which means that a significant decrease in rental income could put owners and operators at risk of not meeting their own financial responsibilities. They rely on rental income to pay employee payroll, mortgage payments, property taxes, and, critically, use these funds to maintain continuity of essential services for apartment communities and rental homes as their residents shelter in place.
Another common misperception is that most renters live in large apartment buildings. The reality is that only 37% of the nation’s 43 million households of renters live in apartments — a significant majority of renters live in single-family homes, and buildings of 2-4 units that are owned and operated by individuals and small businesses. According to the NAA/IREM survey, nearly 20% of the owners of properties of 2-4 units will cease operations in less than a year if delinquencies stay at today’s rates.
Rather than take the approach of financially crippling rental housing owners and operators, a much better approach is to provide rent-payment assistance. Our organization, in cooperation with the Apartment Association of North Carolina and the National Apartment Association, is joining an array of housing advocacy groups in advocating for government at all levels — federal, state and local — to provide direct rent payment assistance for those put at risk by COVID-19.
We are encouraged by work being done at the legislature, like House Bill 1200, “Foreclosure Prevention Grants/Rental & Utility Assistance,” which would allocate more than $100 million to rental and utility assistance. Unfortunately, that bill has yet to make it to Gov. Roy Cooper’s desk, but we continue to aggressively campaign for this and other measures to help address our community’s housing needs.
Like much of the rest of our country, the Piedmont Triad region was already facing a housing affordability crisis before COVID-19 essentially shut down our economy. It was a crisis shaped by a housing supply shortage that was years in the making. If lawmakers do not act, the affordability crisis will only be exacerbated by the economic impact of COVID-19. Rent payment assistance will provide desperately needed relief for residents and residential rental property operators alike.
Jon Lowder is the executive director of the Piedmont Triad Apartment Association.