The pandemic has shaken the foundations of the housing industry as both renters and mom-and-pop landlords struggle to meet their rent and mortgage obligations, respectively.
Many renters are coping with reduced income that often cannot stretch to make timely rent payments. While policies like the Tenant, Homeowner and Small Landlord Relief and Stabilization Act of 2020 (AB 3088) and Senate Bill 91 put in place protections for renters including an eviction moratorium, now extended till June 30, 2021, the plight of small landlords was largely ignored.
Small rental unit owners were unable to ask non-paying tenants to leave, yet they had to continue paying their monthly mortgages and insurance bills and maintain their properties to make it habitable for their renters.
Estimates of total unpaid rent between April and September 2020 in San Francisco, according to a report by The City’s Budget and Legislative Analyst, ranged between $81.3 million and $196.2 million.
About half of all rental units, nationwide, are owned by small landlords (2 to 4 units). Among the characteristics of small landlords, “relative to larger landlords, they are also more likely to be people of color, be retired without other sources of income, and be lower income in general (Choi and Young 2020),” according to a Harvard University study.
Results of a survey conducted in August 2020 by the Urban Institute, a think tank in Washington D. C., revealed that Black, Hispanic and Asian landlords are more likely to hold mortgages on their rental units and are therefore more likely to face trouble paying those mortgages.
“I understand that coronavirus affects everybody,” said Jie Wang, a middle-aged landlord who owns three properties in the Bay Area, one of which is a family-owned restaurant which shuttered last year and remains closed. So the rental income is her only source of income. Wang and her brother manage the properties themselves and Wang says that she has a good relationship with her tenants.
Wang is not an anomaly. In fact, John Yen Wong, founding chairman of the Asian Real Estate Association of America, said that most small mom-and-pop landlords like Wang know their tenants personally and are willing to go the extra mile to help them.
Wong himself grew up in San Francisco’s Chinatown, the son of immigrants who initially rented an apartment and then, in their mid-50s, were able to purchase their own home in the Mission District. Subsequently, Wong became what he calls a “housing provider.” The term landlord comes with an adversarial framework, and Wong prefers not to use that label.
According to Wong, small housing providers, especially from minority communities, typically begin as tenants, and then by scrimping and saving buy that first home. Subsequently, leveraging equity and savings, a second home is acquired. Mom-and-pop housing providers tend to take on the maintenance of their own properties, which helps to forge an amicable relationship between renter and owner.
This was the case with Jie Wang. One of her tenants lost his job and was unable to pay rent. He began to feel guilty about it, “and I really understood him,” Wang said. He told her that he was leaving to go back to his home country, Guatemala. But unfortunately for Wang, the tenant handed his key to his friend who began occupying the unit without paying rent and refusing to vacate. With the courts closed during the pandemic, Wang has been unable to reclaim her rental unit. She has lost 50 percent of her income at a time when she really needs it.
Maeve Elise Brown, executive director and a founder of Housing and Economic Rights Advocates in Oakland, said that she encounters many such hard luck stories from mom-and-pop landlords. Twenty percent of her small landlord clients are Black, another 20 percent Asian, and 25 percent of Latinx heritage. More than one-third are older adults.
She found that small landlords consistently charge below market rents. Brown applauded Wong’s terminology of “housing provider,” but remarked that she prefers the term “affordable housing providers.”
Brown argued that “the state has endangered our housing stock, our affordable housing stock, by failing to recognize that small landlords are affordable housing providers. If they lose their properties they are probably going to lose it to an investor who will charge as much money as the market can bear and will be much more sophisticated at being able to get that done.”
State and local policies make no distinction between large landlords and small landlords, Brown asserted. State policy choices have squarely placed the burden on non-payment of rents on the shoulders of small affordable housing providers.
If small landlords provide affordable housing for San Francisco, it stands to reason that our policymakers must do more to alleviate their financial burden.
Earlier this month, California’s Rent Relief Program authorized by SB 91, went live on the housing.ca.gov site. Landlords can get reimbursed for 80% of an eligible renter’s unpaid rent between April 1, 2020, and March 31, 2021, if they agree to waive the remaining 20% of unpaid rent during that specific time period.
“It’s not a perfect program,” said Wong, but housing advocates have wanted this for some time. In Brown’s view, it is really striking that while this is the first time statewide landlords will have the opportunity to apply directly for relief, it “still requires that the landlord provide income information for the tenant,” implying that privacy issues might become a stumbling block for small landlords.
Time will tell about the success of California’s Rent Relief Program. The last thing we want is for affordable housing providers to lose their properties, ushering us into another foreclosure crisis.
As crimes against Asians continue to surge, this column will profile the community to reinforce the idea of allyship and coalition. Jaya Padmanabhan is a guest columnist and her point of view is not necessarily that of The Examiner. Twitter: @jayapadmanabhan.