Until our late twenties, my wife and I were renters. And, like other renters, we ran into landlords who behaved badly. Landlords who got angry when we exercised our rights or requested repairs or complained about violations. Landlords who tried to evict us illegally. Landlords who entered without proper notice. Landlords who withheld deposit money on spurious grounds. Landlords who treated us more like serfs than clients.
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We’re landlords ourselves now. In 2004, wanting freedom from the vagaries of renting, we bought a house with a “mortgage helper” rental in the basement. Since purchasing that property, we’ve marshalled savings and equity credit and gradually expanded our holdings with the goal of creating income security for retirement. Today, we operate six housing units, including our own, on three properties, two in Halifax and one in Moncton. As landlords, we try our best to do things right. We provide well-maintained homes in good locations at reasonable prices. We inform tenants of their rights. We respond to tenants’ service needs quickly and professionally and don’t defer maintenance. We’ve renovated without resorting to eviction. We don’t increase rent during tenancies. We don’t nickle-and-dime damage-deposit refunds. We have friendly, open relationships with our tenants, but we keep a respectful distance. It really isn’t hard to be a decent landlord, and it pays off. If you treat tenants like valued clients, they respect you right back. If you take care of them, they take care of your property.
In these days of social distancing and self-isolation, the service and space—the safety and security—we provide have never been more critical. As it happens, four of the nine adults currently lodged in our buildings are health care workers, and we’re committed to doing what we can to reduce the risk and burden on them by keeping the other five (including us) sheltered in place. When the first presumptive cases of COVID-19 were announced in New Brunswick and Nova Scotia, before there was any talk of mortgage deferrals and eviction freezes, I wrote to all our tenants to let them know that, if they suffered financial hardship, we would immediately forgive a half-month’s rent without question or demand of later repayment. If that wasn’t equal to people’s needs, I told them, we would figure it out as we went. Our ideal has always been to approach tenant relations humanely, and that ideal is worthless if we abandon it at the first sign of financial distress.
It’s my hope that, in the coming months, more of our colleagues will embrace that ideal. The landlord–tenant relationship is a transactional one, codified by a lease and governed by residential tenancy legislation. While the particulars vary by region, the basic expectation is that the terms will be upheld and the rules adhered to by both parties. But, as landlords have grown increasingly bold in their exploitation of tenants as financial resources, tenants have become angry, educated, and organized, with tenancy-rights organizations and tenant unions generating a lot of momentum over the past few years. Even before COVID-19, the pressure was building. Now, as we barrel into a major economic crisis, it might finally blow.
The pandemic struck at a time of low vacancy and high rent. Rapid urban growth, stagnating wages, rising home prices, vacant investments, money laundering, Airbnb “ghost hotels,” and underregulated rental markets have created a crunch. The vacancy rate in Halifax hovers around 1 percent and dips lower than that in a lot of neighbourhoods. Short-term furnished rentals have skimmed hundreds of prime units from the rental housing market. At the beginning of 2013, when we took possession of our fully renovated, unoccupied, hundred-year-old duplex in Moncton—for $50,000 less than its original list price because it had sat on the market so long—the vacancy rate was roughly 7 percent and the downtown core was down-at-heel and undesirable. Vacancy is now 2.2 percent; newcomers to the area don’t care about—and are transforming—the downtown’s bad rap, and multiunits are being gutted and rehabbed en masse.
In legislative vacuums, landlords have capitalized on demand by jacking up rents, and “renoviction” has become a common practice. Meanwhile, tenants are no wealthier on average than they have ever been. If you have pets or even children, you may face repeated rejection while house hunting. Even if you profile perfectly, there’s so much competition for accommodation that finding a home suitable to your needs can be daunting. Last year, the tenant in our original mortgage helper gave notice that she would be moving out because she was looking for a bigger place to share with her boyfriend. When I advertised, I received about thirty replies in two hours before my tenant contacted me saying she wanted to stay if it wasn’t too late. She and her fella had a budget of around $1,500 and had struck out. She recalls one landlord telling her he’d had so much interest that he was raising the advertised rent by as much as $150.
COVID-19 has provided us landlords with an opportunity to live up to our billing as social benefactors and service providers. Many have declined to seize this opportunity. One New York City landlord went so far as to advise a couple of a 25 percent increase to their $3,200-a-month rent because their building’s proximity to a coronavirus clinic might attract medical staff. Small wonder that the Facebook page Evil Landlords During Corona has a following of over 25,000. Others haven’t been so overtly predatory, but neither have they been shining beacons of humanity. In a local landlords’ social media group, one of the moderators posted imperative advice on March 12, the day after a pandemic was declared by the WHO, to get N2Qs (notices to quit) ready to serve as soon as tenants have failed to pay full rent for fifteen days.
In Indianapolis, one landlord sent a memo to tenants advising them, if they had lost work due to COVID-19, to “tap your rainy day fund because it’s raining.” The memo framed its message in stark Darwinian terms presumably meant to sound altruistic: “We can’t let a few non-paying tenants bring down the whole ship and make everyone homeless. While we will work with you, we will be aggressive to remove people that burden the group. We aren’t doing this because we are greedy or mean, we are doing this to protect everyone as a whole.” After the memo was leaked by a tenant and went viral, its author, the landlord’s attorney, Justin Leverton, apologized. “I realize I made a significant mistake and offended my tenants and the community,” he wrote in an email to Newsweek. “I sent an apology to my tenants within a few hours and apologized for my ignorance, insensitivity, and callousness.”
Our ideal has always been to approach tenant relations humanely, and that ideal is worthless if we abandon it at the first sign of financial distress.
Good on Leverton, but his contrition contained zero assurance that tenants would not in fact be evicted for delinquency during or after the pandemic. And messages like his have been conveyed to tenants all over the continent in recent weeks. A friend of mine who rents in Moncton received, à propos of nothing, an email from her landlord’s property manager advising her that “rent was still due on the 1st of the month.”
These communications convey one thing very clearly: landlords are nervous as hell. And with good reason, it would seem, as tenants are rightfully mobilizing. On a Reddit property-investment forum, a freaked-out Houston landlord appealed for advice after receiving a letter signed by tenants in all thirty-two of his units indicating that they would be withholding April rent. One hopes he has a rainy-day fund.
A few owners have shown more mettle. Greenrock Real Estate Advisors, in Toronto, gave tenants $100 grocery cards and made a six-figure donation to coronavirus-relief charities. In PEI, Wade Beaton made the news for telling tenants in three houses that he’d waive April rent. Curious about the backstory, I dropped Beaton a line. He told me the houses he rents had been seasonal cottages, but his family business was gutted by Airbnb (occupancy plunged from 70 percent to 25 percent) and he needed to stop the bleeding. In order to convert his liabilities back into assets, he relocated the cottages onto proper foundations and expanded them into 2800-square-foot, four-bedroom, two-bathroom, all-season houses, which he rents for $1,300 a month plus utilities—$500 less than anything comparable within eight kilometres.
Because he borrowed heavily and recently to get these houses set up, Beaton isn’t sitting pretty. He approached his bank about mortgage deferrals, but it was only willing to defer principal, not interest. Given that interest payments are front-loaded on a mortgage, that would have meant, effectively, no relief. “The principal on one of my mortgage payments is ten dollars right now,” he told me with a rueful chuckle. Nevertheless, he sees his tenants, primarily, not as sources of income but as his neighbours, and he considers his responsibility not to uphold the terms of leases and tenancy legislation regardless of what’s going on in the broader world but to provide shelter to families in a time of crisis. (He told me that he is also running errands and buying groceries for five other families.) Beaton understands that, given how widespread financial hardship is, if he doesn’t stand by the tenants he has now, there’s not much chance he’ll find ones more solvent to replace them. He can’t afford to sacrifice rental income for long, but luckily, the provincial government has unveiled a temporary rental-assistance program, with $1,000 being provided to eligible tenants over a three-month period.
Beaton told me that, while he’s been praised for his stance, other owners haven’t been so keen on his tenancy clemency. When one landlord he knows told him she was upset about it because she couldn’t afford to do the same, his response was blunt: “What I do with my tenants is none of your business.” Just as leases run month-to-month or year-to-year, so do does the thinking of most landlords: if April rent doesn’t materialize, boot the tenant and find someone else who can pay. But Beaton is a big-picture guy; what happens in April, he knows, won’t matter so much as what goes down in the months and years to come.
Given the revenue that property owners have been able to generate in today’s hot markets, you’d think landlords would be well-positioned to take a hit. As we’ve seen so many times in the not-so-distant past, however, the temptation to make ever more profit has led a lot of investors down dodgy blind alleys. High-interest hard-money loans, maxed-out home equity lines of credit (HELOCs), and credit cards have many landlords severely over leveraged. Some have banked on the higher revenue potential offered by Airbnb only to have the rug pulled out from under them when coronavirus travel advisories led to mass cancellations—without penalty, thanks to the online brokerage voiding all cancellation fees.
Online outrage by Airbnb property owners has ginned up schadenfreude on the part of tenancy-rights advocates who, for years, have warned about how short-term rentals (STRs) harm the neighbourhoods in which they proliferate. Such anecdotal assertions were given academic credibility last year, when McGill researchers published a study of STR market dynamics in Canada. David Wachsmuth, Canada research chair in urban governance at McGill, has said that “we should be really skeptical about commercial operators who want to take entire apartments, entire homes, and convert them into effectively full-time hotels, because that’s activity that’s really coming at a cost to local residents.”
On Fark, a news-aggregating social media site, one user posted a story about a relative who had been renting housing, furnishing it, and listing the units (“twenty something” in all) on Airbnb. When the pandemic was announced, his bookings evaporated and he had some $50,000 in rent due to landlords who either had no idea what was afoot or who had turned a blind eye as long as they were getting paid. The story might be apocryphal, but versions of it are unspooling all over North America. It’s with no small satisfaction that I see fully furnished units in Halifax and Moncton—a likely sign of a former STR—popping up as long-term rentals on Kijiji and Facebook Marketplace. While it’s tempting to point a censorious finger at STR subletters, much like we vilify and shame price-gouging resellers of hand sanitizer and bum paper, what this apocalypse reveals is that the entire market is a house of cards.
How we muddle through this mess and what society will do differently on the other side of it remain unclear. As Beaton put it to me, “There’s a fog here.” Some tenants may believe that eviction suspensions mean they’re off the hook for rent, but as soon as the dust settles, landlords will come knocking. The cost of deferring rent could wind up scotching the benefits, a fact sometimes elided in petitions being circulated by tenancy-advocacy groups. If renters had cash flow issues at the beginning of this crisis, it’s highly unlikely that they’ll be in a better position when it winds down. Governments have so far left it up to tenants and landlords to negotiate repayment terms for rental arrears. Given how toxic relations between most tenants and landlords have been, this isn’t likely to result in amicable, mutually agreeable contracts. Without governments stepping in, there could be an unprecedented wave of evictions and foreclosures. Without direct intervention, the whole mortgage system could implode.
Peering into the fog, it’s hard to say if we’ll emerge from this on open water or fetched up on a reef. I hope that the isolation enforced by the pandemic creates a stronger sense of social solidarity and that the collapse of mortgage systems and short-term rental markets leads to greater fiscal responsibility overall. It certainly won’t without stricter borrowing regulations, though. What’s clear is that housing cannot be the playground of private-sector profiteers. Even prior to the pandemic, the City of Montreal, in the throes of a renoviction crisis, introduced measures to acquire more properties dedicated to social housing. Other jurisdictions need to follow suit. A renaissance of co-op initiatives is overdue and, as Max Fawcett argued recently in Maclean’s, the Canadian government needs to show greater respect to renters.
Barring an actual revolution, private property seems to be with us to stay. What housing remains private needs to be more strictly regulated, and the rules need to be enforced. Landlords who defer maintenance to maximize short-term returns should have their assets seized. Owners operating viable long-term housing units as STRs should be fined until they sell or rent long-term. Frankly, this reluctant capitalist would gladly give up secondary properties to the public good if my wife and I could be assured a comfortable home and adequate income in our golden years.
But, for now, what will keep responsible landlords afloat through rough seas won’t be cagey investment strategies or ruthless business acumen. It won’t be the enforcement of our right to evict. It will be the relationships we’ve cultivated and the solidarity we’ve demonstrated to tenants we treat like neighbours and peers, through good times and bad.