COVID-19 has hit property investors hard as another month is coming to an end leaving millions of North American’s likely unable to pay their rent again on May 1st. According to the National Multifamily Housing Council (NMHC), only 69% of families had paid their rent by April 5th. This is a 12% decrease from March 1st. Unfortunately with millions of people still out of work this month, renters will only continue to have difficulties making their rent payments.
Because of this, many States and Provinces are helping renters avoid eviction during the COVID-19 pandemic, creating frustration for landlords and confusion on all fronts.
Back in March, the Trump administration temporarily suspended evictions and foreclosures for people living in Housing and Urban Development properties, and for homeowners who have single-family mortgages backed by the Federal Housing Administration, Fannie Mae and Freddie Mac.
In Ontario, Premier Doug Ford halted all evictions for non-payment, also making property owners unable to legally proceed with eviction measures as the Ontario Landlord and Tenant Board has suspended the issuing of new eviction orders and all hearings related to eviction applications, unless the matter is urgent. In addition to this, all issued eviction notices are postponed until further notice.
So, what should a landlord do right now?
Before anything else, talk with your tenant. During a time like this, it is important to be human and emphasize with others. Tenants are people too and are going through a scary time as well. It might even be harder on a tenant as you are likely more financially educated than many of your tenants.
2. Explain that Rent is Still Due
With the amount of information being shared about the pause on evictions, some tenants believe that they do not have to pay rent. Even if you can’t evict right now, it is important to nicely let tenants know that they still owe the rent and may be evicted when the courts open back up.
3. Provide Options
Help your tenant get through this stressful time. Keep an eye on programs that the government is issuing to help people out. By staying current on these programs, you may be able to provide guidance for your tenants to this type of assistance.
Is a payment plan an option? Tenants may be able to pay a portion of the rent due in weekly installments, lessening the stress of having rent due all at once on the 1st of the month.
An other possible suggestion for your tenant would be having them pay rent via credit card. Companies like PayPal can assist you in handling this. However, if you can, offer to pay for the fee associated with using a credit card for payment.
If all else fails, it might be time to look into deferring rent for your tenants. While this is a last resort option, it might be the only way to help your tenants stay housed once this pandemic is over, while providing you with a plan to collect all the money owed to you for your rental property.
Chance are your tenants can likely pay some of their rent. Maybe their rent is $1,200/month and they can only pay $700. Create a payment plan that works for you both to allow the tenants to pay that $500 over a reasonable amount of time once everything has settled down. This arrangement would need to be looked at monthly and likely be adjusted until things return to normal and your tenant is able to start paying the amount owed.
Remember, we are here to help. Contact My Legal Valet today if you have any uncertainties regarding the COVID-19 pandemic. We are here to ensure that there is no long-term affects on the income you receive from your rental properties, and can help you create a plan that will work best for everyone affected.