A pedestrian walks past graffiti that reads “Rent Strike” Wednesday, April 1, 2020, in Seattle’s … [+]
ASSOCIATED PRESS
Rent for May comes due today, which community organizers around the country have designated as Rent Strike day. Industry experts, meanwhile, say the strategy is counterproductive and unlikely to secure the sought-after rent relief.
What rent strikers say
As of April 25, more than 30 million Americans have filed for unemployment benefits as the coronavirus pandemic continues to rile the economy. The National Association of Realtors estimates that 31% of tenants nationwide would have to shed more than 30% of their state and federal unemployment checks in order to fully cover monthly rent. A person whose housing expenses surpass 30% of his or her income is considered cost burdened.
“As more people are laid off, we expect [the number of residents who cannot pay rent] to be even higher come the next due date,” says Erica Smiley, executive director of Jobs With Justice, which is coordinating a national rent strike campaign.
The Upstate Downstate Housing Alliance, which unites 70 community groups across New York, is also coordinating a state-wide rent strike on May 1 under the banner #CantPayMay.
“What the rent strike does is it is changing the fact that people are alone and unable to pay rent into something that is powerful and political and a way to take political action,” says Cea Weaver, campaign coordinator for the alliance.
Democratic House Representative Alexandria Ocasio-Cortez recently expressed her support for a rent strike, saying that “people aren’t striking because they don’t feel like paying rent. People are striking because they can’t pay rent.”
Jobs With Justice is calling on corporate landlords to cancel rent through the course of the pandemic – or at least through June. Some of the large property owners Jobs With Justice is targeting include Greystar, Equity Residential, FirstKey Homes (which oversees properties owned by Cerberus Capital Management) and Lincoln Property Company.
“We suspect that a good percentage of people who rent from those properties will be participating in the rent strike but we aren’t sure exactly what percentage,” says Smiley, adding that multi-million-dollar apartment companies can afford to temporarily forgo rent.
Equity Residential, founded by billionaire Sam Zell, for instance, owns or has invested in about 310 properties, totaling nearly 80,000 apartment units, in Boston, New York, Seattle, San Francisco and Washington D.C., among other cities, according to the company’s corporate profile page.
Lincoln Property Company bills itself as “the second largest multifamily manger in the U.S. with over 200,000 units under management and the fifth largest multifamily developer” in a press release announcing its closure of an $800 million fund late last year.
On its investor web page, Greystar states that it holds over 536,000 units and student beds around the word, $27 billion of assets under management and about half that amount in sponsored rental housing projects.
Smiley says that unlike mom-and-pop landlords, institutional property owners could be hard to negotiate with, especially from the position of a single renter. She says Jobs With Justice has sent emails to landlords, urging them to forgive rent.
“We definitely would prefer not to take action on May 1,” she says. “We prefer that they would respond and just say, ‘Okay, rent is cancel through June or the duration of the pandemic, whichever comes first.’ Then, we would all just continue to try to survive this traumatic thing together. But, of course, if they don’t respond, then we are definitely prepared to withhold rent.”
What landlords say
On April 29, American Housing Communities, which is the nation’s largest developer, owner and manager of high-end student housing, according to its website, replied to Smiley’s correspondence with a letter than in part reads, “To date, American Campus Communities has forgiven approximately $17 million in rent and offered thousands of additional deferment of rent payments to residents and parents who have experienced a diminishment in income due to COVID-19.”
FirstKey Homes provided the following statement in a response to this reporter’s list of questions, covering its rent relief actions, any economic fallout resultant from the coronavirus pandemic and the potential effects of a rent strike:
“In response to the coronavirus pandemic, FirstKey Homes immediately implemented relief measures, including a rent deferral program, waiving late fees, and suspending eviction filings and proceedings. We are proud to provide thousands of families with homes that they love and we will continue to work tirelessly to support our residents during this difficult time.”
In response to the same set of questions, Greystar said:
“We know the economic impact and financial uncertainty COVID-19 has caused, which is why we’re working closely with residents facing financial hardship. At our owned communities, we are offering flexible payment options and are not taking any punitive actions for unpaid rent at this time, which includes waiving late fees, not reporting delinquencies to credit agencies, and upholding all federal, state and local moratoriums on evictions. We have made the same recommendations to the property owners of the communities we manage. Additionally, we support the efforts of industry organizations such as the National Apartment Association (NAA), who are asking Congress to create a direct rental assistance program for impacted residents.”
At the time of publication, Lincoln Property Company had not responded to a request for comment, while Equity Residential declined to comment.
What industry leaders say
In separate interviews, Bob Pinnegar, President and CEO of the National Apartment Association, and National Multifamily Housing Council President Doug Bibby said a rent strike is a counterproductive tactic that would hurt more Americans than it intends to help.
“It’s actually reckless,” says Bibby. “It is potentially destructive to the economy.”
For one, he says, a diminished rent inflow jeopardizes the jobs of property management employees such as lease office administrators, maintenance crews, accountants and security personnel.
“There is a huge number of [landlords] who are small business owners,” he says. “They have mortgages, they have payroll, they have taxes, they have insurance and they have utilities. When you have a rent strike the place the owners will turn first is the expense that he or she can cutting [most easily]. You’re not going to cut your mortgage payment. You’re not going to cut your taxes. You’re not going to cut your insurance. You’re not going to cut your utilities. You’re going to cut your payroll.”
Bibby adds, “What happens is that the people [who are rent striking] are going to be putting people out of work who look exactly like them; demographically, they’re identical. The people who work in apartment buildings to keep them safe and healthy and sanitized and functioning.”
Even if large-scale apartment owners and operators possess more financial leeway than their smaller counterparts to weather a decline in rent payments, investors in multifamily housing, such as pension funds, could sustain a blow from a widespread rent strike.
“What happens if the rents are not paid and the pension fund doesn’t receive the income,” says Pinnegar. “What should funds do to be able to pay those pensioners, many of whom are public employees?”
The coronavirus and the stock market sell-off that has accompanied it have already erased $1 trillion from pension funds, according to an estimate by financial services company Moody’s. Pension funds send monthly checks to 11 million Americans, according to the New York Times.
Moreover, diminished rent revenues exert pressure on property owners’ ability to pay their mortgages, even if they can secure a CARES Act-mandated 90-day forbearance for government-backed loans. According to the Federal Reserve Bank of St. Louis, mortgages for rental buildings of five or more units amount to $1.5 trillion, approximately one third of which is secured by the government-sponsored enterprises of Freddie Mac and Fannie Mae.
“If you put $1.5 trillion in mortgages at risk of default, that’s going to have shock waves throughout our economic system,” says Pinnegar. “It’s not going to result in a higher quality of housing. It is going to be a lower quality of housing and the foreclosure process is going to be disruptive to residents.”
What is Congress called to do
As Congress considers more economic relief, Pinnegar and Bibby encourage financially burdened renters to lobby lawmakers for rent relief programs.
“I would organize letter writing campaign emails and phone calls, flooding members of Congress with, ‘We need help,’” Bibby says.
At the same time, aside from calling for an extended and flexible mortgage forbearance plan and an eviction policy that would allow for effective property management, the NAA is proposing an emergency rent relief program that would resemble the natural-disaster protocol by which tenants receive rent vouchers to meet their obligations.
“It’s something that could be put together in a relatively short period of time,” Pinnegar says. “It would provide relief across the entire spectrum and to everybody that lives in rental housing.”
Smiley, the executive director of Jobs With Justice, says that any economic relief offered to multifamily landlords should trickle down to renters.
“We want to make sure that we all make this collective sacrifice,” Smiley says. “We want to make sure that everyday people are taken care of and not just the richest among us.”
Representative Ilhan Omar (D-M.N.) has recently introduced a bill to cancel rent and mortgage payments for the duration of the pandemic. Reps. Alexandria Ocasio-Cortez (D-NY), Rashida Tlaib (D-MI), Pramila Jayapal (D-WA), Mark Pocan (D-WI), Ayanna Pressley (D-MA), Veronica Escobar (D-TX), Jesús “Chuy” García (D-IL), and Grace Meng (D-NY) are cosponsoring the proposal, while Senate Democratic Leader Charles Schumer (N.Y.) has also stated his support for rent relief as part of the fourth increment of federal aid amid the pandemic.