Last week bought more welcome news from the multifamily sector, as another group of large landlords declared they would work with tenants behind on rent to avoid evictions.
But the state’s leaders should not confuse this or a similar recent pledge by orchestrated recently by the Greater Boston Real Estate Board with a permanent solution to the state’s growing eviction problem.
As of this writing, many of the state’s biggest landlords representing tens of thousands of units across Massachusetts have committed to holding off on evictions until 2021, to seek mediation if tenants are in arrears and to and working with those tenants to develop payment plans instead of evicting.
While the pledge doesn’t include many of the “mom and pop” landlords who own a large slice of the state’s apartments, academic research shows that small landlords are significantly less likely to file for evictions than their larger brethren thanks in part to the relationships they develop with their tenants and the expense and difficulty associated with filing an eviction case without a staff attorney.
That said, legislators have to understand the commitments made by large landlords are buttressed by much deeper financial reserves than many small landlords have access to, and often much more sympathetic financing terms. Winn Residential and Fenway CDC are hardly using hard money lenders and their high interest rates to finance property purchases or upgrades of existing buildings, for example, whereas more than a few small landlords are.
These kinds of stresses are already taking their toll: MassLandlords reports its members are selling out of the business at a much higher rate than the typical pre-pandemic turnover. Without more rental assistance from the state or the federal government, Jan. 1 will be as far as many of these housing providers can go.
But beyond fairness, why does it matter that small landlords are being run out of business?
First, small landlords are the principal source of what’s called “naturally-occurring” affordable housing: property that’s rented out at below-market rates thanks to age, location, lack of amenities or the owner’s finances. When one of these units sells, it does so at market rate and usually without subsidies, often forcing the buyer to increase rent significantly to cover their borrowing costs.
Second, rental property is an important way people build wealth in Massachusetts, particularly among immigrant communities and communities of color whose members are much more likely to be locked out of other ways to build wealth, like high-paying jobs that require professional degrees.
Finding a source for more rental aid money will be hard at the state level without resorting to borrowing. Our congressional delegation must work hard to secure federal funds to prevent evictions during a pandemic – the predictable result of which will be an increase in crowded homes as evicted households move in with friends and relatives.
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