[COVID-19] Majority of Tenants Still Making Timely Payments Despite Economic Turmoil

May 20, 2020 by Dennis R. Baranowski, Esq.

Data compiled by the National Multifamily Housing Council (NMHC) from over 11.4 million units of professionally managed apartment complexes indicated that by May 13 a total of 87.7% of apartment tenants nationwide had submitted full or partial rent installments—up 2.7% from April 13.

The May 13 survey result is a 2.1% dip in the percentage of tenants who paid installments through the same date in 2019.

Looking at April 2020, the percentage of rent payments made by the 13th was 85% and increased to 94.6 by the end of the month. It is yet to be seen whether a similar rise in submitted rent installments will occur this year due to the ongoing economic destabilization across all sectors stemming from the COVID-19 pandemic.

“Once again, despite the economic and health challenges facing so many, we have found that apartment residents who live in professionally managed properties are meeting their obligations,” surmised Doug Bibby, the current NMHC President. However, Bibby went on to note that the metrics do not account for rent payments for smaller apartment complexes or for affordable and subsidized properties where there is a greater likelihood that tenants are finding it hard to make timely rent payments. “These excluded properties are the ones more likely to house residents experiencing financial stress. In addition, as current federal support programs being to reach their limit, it will be even more critical for Congress to enact a meaningful renter assistance program. It’s the only way to avoid adding a housing crisis to our health and economic crisis,” Bibby explained.

The NMHC data was collected on a weekly basis, with the first data collection occurring on the 1st through the 6th, and all subsequent data collections being cumulative. For example, the second collection was the 1st through the 13th of the month, the third from the 1st through the 20th and so on for the remainder of the month. In determining the data collection protocol, the NMHC wished to track when rent was officially deemed late, and thus initially used the close of business on the 5th as that date. Following further consultation with several property managers and data providers, NMHC was informed that a wide range of dates are used to determine when rent is considered late. Additionally, managers that use the 5th as their deadline reported that the majority of tenants pay on the last day possible and that some of those payments were not posted until the 6th.

The survey accounted for partial payments only once per month, and the payment was recorded in the first time period in which it occurred. For example, if an apartment renter paid a quarter of their rent during the week of May 1, it was recorded in the first week. Subsequent payments for that month were not recorded to avoid double counting. The data percentages comprising the survey results were based on the total occupied units, excluding vacant units, purpose-built student housing, privatized military housing and subsidized affordable units. The number of total occupied units will change for many of the property manage software providers as new units are leased or vacated, meaning that the total number of units in the dataset will fluctuate.

If you have any questions about how COVID-19 is impacting your business, reach out to Geraci Law Firm here.

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