4 Reasons Why Landlords Are Declining Rental Assistance
There has been news and articles about the slow rollout of the $45 billion in rental assistance funds. At the end of July, only $4.7 billion has been distributed according to the U.S. Treasury. There are many issues that have the caused the slow process, but an interesting one is that landlords do not want to participate. Why would a landlord not want the money owed to them? Here are 4 reasons why landlords are declining rental assistance.
Sell, Sell, Sell…Real Estate Prices Increasing
The dramatic increase in real estate prices over the last 18 months has caused landlords to reconsider their investment strategy. According to Zillow, the average home price is up 13.2% since June 2020. Although many landlords plan on holding onto their property for the long term, others have decided to sell their property while the market is hot to make a big profit. In order to sell, they want their property empty and clear of any issues.
Tenants in Trouble before the Pandemic
If a tenant was having trouble paying rent or was considered a problem tenant before the pandemic, then the landlord’s attitude has not changed since the eviction moratorium has been in place. If anything, the delay has caused additional headaches. Since a participating landlord cannot take legal action against a tenant using rental assistance, the landlord is not going to participate in the program. Basically, they want the freedom to start over with a clean slate.
Rent Rates are Increasing
The rise in rental rates is also driving landlords to not participate in the rental assistance program. As shown below in the data from Realtor.com, the average rent increase last year was 5.5%. If current tenants owe back rent and are paying a below market rate, landlords believe they can rent their units at higher rates to new tenants with fewer problems. The low unemployment rate which is increasing wages adds support to this belief.
One of the requirements of the rental assistance program is for landlords to provide financial information about their rental property to the Federal Government. Since this is private information, some landlords fear they could be targeted for a tax audit or other scrutiny. As a result, they don’t want to participate in the rental assistance program.
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