Landlord-tenant cooperation crucial during pandemic
We are in themiddle of a pandemic-induced rental housing crisis in California, one which is potentially devastating for Marin County tenants and landlords alike.
Having been in the residential, single-family rental business representing landlords in Marin for over 15 years, our property management company has seen (and lived through) ups and downs in the market. But none have been quite like this one.
W hile Marin unemployment is at its highest level in decades, residential home sales prices are also increasing at a record pace. This, in more normal times, would not be occurring.
These are not normal times. The inventory, particularly in the $2 million and under price range, is diminishing due to high demand and exceptionally low interest rates.
Single-family rental homes, nearly always scarce in Marin, are also being dramatically affected by a moratorium on evictions that has created real dilemmas and disincentives for “momand pop” landlords. These “accidental landlords,” who bought their properties as their primary residence, never thought of them as investment properties. When the time came, rather than sell the property, they instead chose to become landlords and rent the home.
For many years, this wasmutually beneficial, providing income for owners and inventory for tenants. Now, often with life savings tied up in these homes, local landlords are increasingly faced with the reality that theymay have to sell their property, removing it from our local rental pool.
Many “mom and pop” rental owners cannot meet their own financial obligations without the rental income. The recent passage of Assembly Bill 3088 (the COVID Tenant Relief Act) means that a landlord who possibly hasn’t had any rental income since Marchmay now not receive rent until January of 2021. And even then, that could be only 25% of what is due.
AB 3088 is a massive problem. It is akin to owning a small business that is being forced to close, eliminating income without financial relief or a clear path to restoration.
At the same time, we believe that tenants deserve protection, as they may have had a significant loss of income related to the pandemic. Legitimately affected tenants absolutely deserve the help and safety net of eviction protection. But landlords need protection too or the consequences will be devastating to the Marin rental market.
Managing single family residential rentals has been our business for the last decade. We have been involved in over $1 billion of transactions, with a less than 1% eviction rate. While we represent landlords, we are sympathetic to the plight of tenants. At our firm, we urge our landlord clients to work with tenants to find payment solutions that are fair to both parties. Landlords should attend coaching webinars to help them understand the changing legislation, eviction protection laws and their changing obligations as landlords in Marin.
We will say this: Landlords who aren’t paying attention are at risk.
As could be expected, there has been a seemingly endless series of legislative approaches that are geared toward fixing something that can only be fixable when landlords and tenants work together. Landlords have to educate themselves on current legislation to stay compliant. Tenants must recognize that the protections should only be used by those who need them. As the IJ so aptly editorialized on Sept. 10, “passing laws to ban evictions without taking into consideration that landlords face similar financial stress is shortsighted.”
We need a constructive dialogue that considers the broad implications of eviction moratoriums, housing inventory reductions and mortgage forbearance.
Make no mistake, the economic viability of Marin is deeply tied to a cooperative approach among landlords, tenants, activists and legislators. There are no easy solutions, but we are hopefulMarin will be a leader as it has been on so many issues over the years.