Since the outbreak of COVID-19, renters have struggled more than homeowners to make their housing payments. Despite having greater financial challenges, renters have received less comprehensive government support than homeowners have. To better understand renters’ struggles during the pandemic, we have been working with Avail—an online platform that serves do-it-yourself mom-and-pop landlords and their tenants—to develop questions for ongoing tenant and landlord surveys.
Avail provides valuable and scarce data (PDF) that include monthly rental payment information for about 53,000 properties owned by individual landlords and periodic surveys to their tenants and landlords. From Avail administrative data (their records of rent collected each month) and their October survey of landlords and tenants (which had 2,452 respondents), we found that a greater share of tenants in rental housing that is owned by individual landlords are struggling to pay rent, especially as government assistance has decreased. And low-income renters and renters in their prime working years are struggling the most.
A higher share of renters who live in properties owned by mom-and-pop landlords are struggling to pay their rent
According to Avail rental collection data, 13 percent of renters were unable to pay their rent in recent months, a share that has not changed significantly since the outbreak of COVID-19. This number is 6 to 7 percentage points higher than the share of people living in large multifamily units owned by professional property management companies, reflecting differences in the tenants’ financial status and landlord-tenant relationships. Those living in large multifamily units—generally owned by large institutional investors—are, on average, better off than those who live in smaller units owned by mom-and-pop landlords.
Low-income renters and renters in their prime working age are struggling the most
Avail’s October survey—which was disproportionately answered by renters struggling to pay rent—helps us understand these tenants. Thirty-five percent of respondents were unable to pay full rent in September. The share of respondents who were not able to pay full rent increased between August (31 percent) and September (35 percent), and the share of renters who anticipated that they will be unable to pay full rent in October was even higher (44 percent). These numbers suggest that the financial burden for many renters is increasing as the pandemic continues and as future labor market conditions and additional government assistance remain uncertain.
As expected, financial stress is high for low-income households: 46 percent of households with annual incomes below $25,000 said they were unable to fully pay their September rent, compared with only 9 percent of households earning $125,000 or more. A greater share of those in prime working ages (ages 30 to 49) did not pay full rent in September: 41 percent of 30-to-39-year-olds and 37 percent of 40-to-49-year-olds did not pay full rent, compared with 32 percent of those 29 and younger and 27 percent of those 50 and older.
The survey also reveals the importance of accumulated wealth and household characteristics. Renters younger than 50 with incomes between $25,000 and $49,000 were less likely to make their full September rent payments than renters 50 and older who earn less than $25,000. This is largely because renters older than 50 have more accumulated wealth to pay their rent and have fewer expenses because they are likely to have fewer dependents younger than 18. Renters hit the hardest are in the prime age range for supporting dependent children.
Government aid, including unemployment assistance, has helped renters weather the pandemic thus far
Government aid helped about one-third of respondents pay their rent. Thirty-one percent said they paid their September rent thanks to unemployment assistance, government aid, or other relief programs, and 29 percent pointed to government aid or assistance as an action or policy that helped them during the pandemic.
The loss of employment or reduction of income was the most common challenge to those who could not fully pay their rent (70 percent), and nearly 19 percent of respondents faced challenges paying their rent in September because of lost or reduced unemployment benefits. Unless the labor market recovers quickly, which seems unlikely, many renters will face greater challenges paying their rent going forward if unemployment benefits are not extended.
Renters and landlords need urgent and universal policy action
In an open-ended question, many tenants expressed mounting stress about paying their rent on time and staying housed, being able to afford food, taking care of their children, and searching for jobs amid the pandemic. Some asked for landlords to understand their financial situations and not raise the rent or collect late fees. Some also emphasized that better communication is needed between landlords and tenants. A few expressed thanks to supportive landlords and recognized that landlords also need support to make their mortgage payments.
For over 25 years, I have always paid my rent or mortgage without government assistance of any form, but at 53 years old, for the first time in my life, I am having to depend [on] unemployment [for] [Pandemic Unemployment Assistance] from the government, which does not come close to covering monthly expenses. Right now, I have to prioritize what I pay, and as of October, I can’t make my rent payment. My landlord understands, but it’s not fair to her either. Very frustrating situation for all. Need help from the government, but they are too busy playing politics because none of this impacts them.
—Avail survey respondent from Georgia
Whether renters can delay their rental payment is up to their landlord. Unlike homeowners, 70 percent of whom have received a one-year option to defer their mortgage payment, renters have limited and random options, which increases uncertainty
Many mom-and-pop landlords are also struggling to make their mortgage payments. It’s unrealistic to expect this group—many of whom are struggling themselves—to develop cost-effective solutions to support renters. Landlords in Avail’s October survey expressed increasing concerns about their own financial situations, with about 30 percent saying they feel increased pressure to sell their properties.
The Avail data show that federal government assistance, including unemployment insurance, has been instrumental in helping renters who are struggling to pay rent. A recent study (PDF) also found that unemployment benefits boost household spending and have kept the economy running during the pandemic. Each day that new government assistance isn’t passed makes renters increasingly vulnerable to job loss or income reduction. Renters need quick policy actions, whether it is rental assistance or increased unemployment benefits, before their circumstances worsen.