What the end of the eviction moratorium means for property owners

According to the National Apartment Association (NAA), the U.S. rental industry is facing $26.6B in debt following the eviction moratorium. But property owners aren’t the only ones facing long-term consequences from these protections — the eviction moratorium limited rental availability during a period of high demand, which, among other reasons, helped pave the way to the national rent surge we see today. That means that when the eviction ban finally lifted on August 26, 2021, renters who sought assistance during the pandemic also faced the prospect of significant increases in their rent following the moratoriums.

Now that the eviction moratorium has been lifted across the country, landlords and owners have a decision to make: Should they follow the trend of raising rents and pursuing evictions, no matter the cost? Or should they explore ways to retain their current residents, and avoid eviction altogether?

It all comes down to what’s going to make the most financial sense for long term growth. Decisions will vary depending on individual circumstances and priorities, but one thing’s for certain: eviction isn’t the only option for NOI-driven owners and operators.

The true cost of eviction for owners and landlords

Evictions can be tough for both sides of the rental agreement. While many might assume that evictions would be the natural response to the eviction moratoriums lifting, this may not be the case for property teams looking to keep occupancy rates high and keep turnover costs to a minimum. Here are a few factors to keep in mind when considering an eviction:

Evictions can take time. Depending on the state that you’re in, the eviction process can take anywhere from two weeks to three or more months. Back rent continues to accrue during this period, so your losses from unpaid rent can increase exponentially. There are also many things that can slow an eviction down: from the court’s allowance of multiple offenses (unpaid rent is not typically grounds for immediate eviction), to evidence being brought against you, to a renter’s refusal to leave after the court rules in your favor.

Going to court will cost you. In many cases, an attorney is hired to file paperwork and carry out the eviction in court. Attorneys charge by the hour or a flat fee. You’ll incur court expenses as well, but the national average is $50.

The odds of recovering unpaid funds are low. After a renter is evicted, you’ll likely have to absorb the accumulation of your renter’s unpaid rent.

Turnover costs can get ugly. Once a renter has vacated the premises, the cost of maintenance fees, repairs, professional cleaning, aesthetic upgrades, vacancy, preparing the unit for rent, and advertising it all fall on your shoulders. This can easily amount to thousands of dollars.

For these reasons and more, evictions aren’t necessarily the choice option for many owners and operators following the end of the eviction moratorium. According to Harvard’s recent Designing for Housing Stability report:

Over 70% of landlords prefer to address non-payment cases outside of court

81% of property owners reported being less likely to pursue eviction if their renters have access to rental or cash assistance

Roughly 53% shared that they would be more likely to participate in a mediation with a renter if the renter had access to legal representation.

To avoid the cost and administrative headache of eviction, we suggest partnering directly with renters to explore alternative routes. By working with them to find a solution that fits your joint circumstances, you’ll increase your probability of recovering your losses and building a relationship that inspires security and stability down the line.

Tips for talking to renters about back rent

Talking to renters about back rent is never easy, but it’s helpful for finding common ground. We suggest being open with your renters about the hardships that you’ve faced as a landlord during the COVID-19 pandemic, and share why you’d like for things to work out. Recognize and acknowledge the role that you may have played in creating any tension that may have existed between you and the renter in the past. Then, present a plan for moving forward that could be a benefit to you both.

Alternative rent repayment options

There are a couple of ways to recover what you’re owed from renters. Consider:

Accepting small payments instead of one large lump sum. Instead of asking your renters to pay one lump sum per month, be flexible in allowing them to pay two small payments each month instead.

Waiving late fees. By giving renters a break on their late fees, it might make it easier and less overwhelming for them to pay what they owe.

Add back rent to future payments. Explore ways to tack back rent onto future rent payments so that a renter can pay off their debt over a set period of time. This could mean adding a percentage of your owed rent to every new rent payment for the next six months, or until you’re fully paid off.

Lowering the total rent. Explore how much of a loss you’d take by lowering the total rent for the renters who can’t make their current payments. If this makes it easier to begin receiving more regular rental income, then it might be worth doing to protect your bottom line.

Partnering with renters to apply for rental assistance programs

Rental assistance programs are a great route for avoiding immediate eviction. State and local programs are distributing billions in federal funds to help cover housing costs while your renters get back on a regular payment schedule. To apply for emergency rental assistance (ERAP), simply search for your state in the Consumer Financial Protection Bureau renter assistance directory. There, you’ll find your state’s ERAP website, which will include landlord applications, renter applications, and state-specific qualifications.

Both renters and landlords can apply for rental assistance. Even when renters apply, they’ll likely reach out to their property teams for assistance. We suggest working together with your renters to submit applications. That way, you’ll have a better chance at streamlining efforts and receiving the funds you need. It’s also important to pay close attention to your state’s requested documentation during submission — if you miss a document, it could delay the processing of your application by weeks.

The time it takes for your application to be processed and approved varies from state to state. While it all depends on the volume of applications that are being received, you should plan for at least three to four weeks of processing time. Once approved, relief funds will be sent directly to you, and your renters will be notified of every payment that’s been made. It’s important to note that once you begin receiving ERAP funds, you cannot evict a renter for not paying rent during the period in which you are covered. Program guidance also strongly encourages landlords to prohibit eviction for 30 to 90 days after the period covered by rental assistance ends. In today’s climate, it’s important to give renters options for satisfying their financial requirements. Learn how Rhino lowers upfront move-in costs to accelerate signings and boost renewals for NOI-driven property teams. Contact us today.

Jessica White

Jessica White is a senior writer at Rhino who considers herself a queen of small victories. She believes that every renter’s biggest win is kicking cash deposits to the curb.