The pandemic has brought about challenges in almost all aspects of life. No one was spared from the unprecedented challenges it brought. In effect, industries once classified as stable have crumbled, too. One of these industries is real estate, particularly the rental sector.
During the pandemic, many landlords experienced shortfalls in rent. This includes both the payment delays and the decreasing number of tenants. That’s expected, given that many individuals lost their jobs or had to work fewer hours. Aside from the reduced income, the pandemic brought several other challenges that landlords had to face and walk through to keep afloat.
Here’s a detailed breakdown of some of the problems that property landlords face during a pandemic:
1. Restrained Oversight Of Property
At the peak of the pandemic, nearly every region had lockdowns and strict travel restrictions. Landlords couldn’t travel freely to their rental property and address some of the concerns raised by tenants or follow up on payments. This was especially true for those landlords with several properties to oversee spread across different areas. As such, tenant complaints significantly increased, and that’s bad for the real estate business.
One way to solve such management issues is to use property management software for landlords. With such, landlords can achieve a smooth running of their rental property in the following ways:
- Maintaining up-to-date tenant profiles to help quickly identify the occupant of each unit whenever the need arises
- Seeing real-time information about the status of rent collection
- Streamlining communications with tenants and lessening response times for added tenant satisfaction
- Having a list of outstanding maintenance requests
- Coordinating vacancy postings and maintaining an applicant database
- Screening applicants for eligibility
- Automatically tracking late payments
- Generating automatic payment reports
2. Limited Budget For Expenses
It’s improper to assume that landlords don’t face financial difficulties. Not all of them have rental income as a second income inflow. Others depend on it as their primary source of money to suffice their day-to-day expenses. With tenants asking for more grace periods on rentals, landlords are experiencing delays in receiving payments.
This puts them in a difficult position of understanding the financial dilemma of their tenants to avoid completely losing them. To add, they also need to cover their expenses. With less income, landlords are forced to budget their finances accordingly.
3. Delayed Mortgage Payments
Low-income landlords may have also taken out a mortgage to fund the acquisition of their rental properties. This isn’t an uncommon situation. As the rental industry has always been an attractive one, entrepreneurs don’t mind applying for loans to acquire property they can rent out. There are always tenants who are looking for homes to rent.
The pandemic, however, has changed this. Small and big businesses had to close temporarily and many lost their jobs. This means that landlords who had to take out a mortgage for their rental properties are experiencing delays in payments.
This puts landlords in a position to also ask for grace period from lending or credit institutions to explain their delay in mortgage payments. If lucky, the transparent discussion with the lenders will bring about a mutual understanding in light of the pandemic. If this isn’t reached, however, many landlords may have had to look for other jobs or income-earning opportunities to pay their loans on time to avoid penalties.
4. Revision Of The ‘Force Majeure’ Clause In Lease Contracts
Lease contracts are usually complete with a ‘force majeure’ Clause. This refers to that portion that quantifies what ‘force majeure’ situations are that would warrant delays in rental payments. When the delay is caused by a force majeure, the landlord is prohibited from evicting the tenant.
Generally, however, ‘force majeure’ situations are calamities or events and situations that are beyond human intervention. Because the pandemic is an unprecedented event, such a situation may not have been included.
But, in the name of fairness and perhaps by legal order in some jurisdictions, landlords had to make that adjustment. This means ‘force majeure’ situations now include the pandemic. So, landlords can’t evict tenants due to delays in rental due to unemployment during the pandemic.
With the enumeration above, the picture is now clear that the rapid spread of COVID-19 has brought about challenges even to landlords. In the past, the rental industry has consistently been stable. The pandemic has, however, spared no one. As neither commercial nor residential landlords are exempt from local directives against the pandemic, it’s important for them to understand their rights and remedies. And, as the world slowly recovers from the pandemic, it’s hoped that these problems will soon be in the past and landlords can move on to a more positive start.