Covid-19: A time for landlords and tenants to work together on change
by Katherine Eagleson
In planning for the 2020 year I never would have thought all staff, and the rest of the world, would be working from home, taking it day-by-day, doing their best to avoid a highly contagious virus. It’s unprecedented. Something out of a sci-fi or horror movie. The uncertainty affecting tenants and landlords alike is staggering.
Sadly, the crisis is forming a divide between tenants and landlords. In some instances tenant activists are using the virus to spread their own message to stage a tenant wide rent strike encouraging other renters to withhold payments to their landlords, even if they can continue to afford their rent. On the other side, some landlords are demanding rent in full and preparing non-payment of rent paperwork.
It’s important when we discuss these issues, to have a better understanding of who tenants and landlords are. In Greater Vancouver there are 960,895 households and of those 36% are renters. What the covid-19 crisis has brought to the foreground is just how many of these households are spending overspending on their shelter costs. Of owner households, 25% spend over 30% of their income on their housing expenses. On the other side, 43% of tenants spend over 30% of their income on their housing. A substantial difference. It should come to no surprise the covid-19 crisis has exposed those living pay cheque to pay cheque and put them into a vulnerable place. 60% of owners in the lower mainland have mortgages on their properties. Tenant advocates have spoken about landlords getting mortgage deferrals as a result of covid-19 so they can “pass those savings onto renters”. It became necessary to clarify a mortgage deferral by a bank does not constitute any savings. There is no mortgage forgiveness, and not all landlords will qualify for a deferral. Those who do, the deferred amount has to be paid back with compound interest. The bank also secures any deferral it offers by way of their mortgage with the landlord, as in the deferred amount is added to the mortgage principal, whereas the landlord doesn’t have any security for deferred rent from a tenant.
Many renters have a landlord character in their mind of a multi-millionaire, especially as the average property value is $1,005,920. The reality is most residential landlords are mom and pop small businesses who rely on the rent income to cover the operating expenses. Operating costs for landlords over the last 10 years have grown by 7.6% when rents have risen by 3.2% over the same period. Margins are narrower and the rent is a necessity to keep things going.
We at Eagleson Properties were able to offer deferrals under varying terms to any tenant that required assistance for April on behalf of the landlord, but there are continued concerns on both sides with what will happen as May 1st approaches. Tenants who were already paying a high percentage of their income on their housing costs are now looking at other options of downsizing, roommates, or moving away from historically the more expensive communities, such as Kitsilano.
If anything good comes from the covid-19 crisis, it should be both landlords and tenants alike rally together to pressure the Provincial government to administer a large-scale rent bank through the Income Assistance offices. There is a small network of rent banks in BC, however it has neither the loan capital nor the infrastructure to handle large scale lending. Furthermore, the federal government, through CMHC, can be involved by backing these rent bank loans thereby mitigating the Province’s risk. By implementing a rent bank there would be no need for evictions due to non-payment of rent.
Send an email to Premier Horgan, Minister James, Minister Robinson and, MLA Chandra-Herbert asking them to immediately implement a rent bank for renters impacted by the covid-19 crisis, and anything else that may come. This is an opportunity to come together. Email addresses are below.
Premier Horgan: firstname.lastname@example.org
Minister James: FIN.Minister@gov.bc.ca
Minister Robinson: MAH.email@example.com
MLA Chandra-Herbert: firstname.lastname@example.org