What happened: Goodman Commercial Inc. surveyed a dozen multi-family property owners of varying sizes and generally found that between 2% and 20% of those landlords’ tenants didn’t pay their rent this month or offered partial payment. In some extreme cases, landlords saw up to 50% of tenants not pay their full rent.
Why it matters: Firm principal Mark Goodman warns that tenants not paying their rent will create a domino effect with devastating economic consequences for families and communities.
As workers grapple with layoffs and reduced income, many Canadians have begun calling on governments to outright cancel rent and mortgage payments.
Nearly 775,000 individuals have signed a petition calling on the federal government to do just that. Others have urged hard-hit Canadians to keep their rent this month.
“There is a movement right now in the City of Vancouver – on Facebook and Twitter and social media – where there’s this call of unity to band together and not pay rent,” said Goodman Commercial Inc. principal Mark Goodman.
“There’s a naivety out there that’s not being properly addressed,” he explained. “There is a domino effect. We are all connected, and this call to action for tenants not to pay is going to have devastating consequences, not just for housing providers, but for entire communities.”
Goodman Commercial recently surveyed a dozen multi-family property owners of varying sizes, from small family-owned operations to large institutional investors. The firm’s data found that, generally speaking, between 2% and 20% of those landlords’ tenants didn’t pay their rent this month or offered a partial rent payment.
In some extreme cases, landlords saw up to 50% of tenants not pay their full rent on April 1.
One medium-sized landlord surveyed by the firm saw 35% to 45% of its tenants not pay rent. “They’re hooped,” said Goodman, noting that the situation threatens the livelihoods, savings and retirements of people who rent out properties. Such a case is at present an outlier, with the majority of Goodman Commercial's survey responses falling between the range of 2% and 5%.
Goodman believes that the B.C. government’s promise that no tenant in B.C. would face eviction during the COVID-19 crisis has been interpreted by some as a licence to not pay rent. The province has clarified that tenants are still required to pay their rent. At the same time, the province has also banned evictions, with some exceptions.
“People don’t understand how bad it is in the industry right now,” said Goodman, who added that it’s not inconceivable that banks begin to foreclose on properties that can’t cover their costs.
Last week, the province approved a $500 renters’ supplement and other measures to support residents facing financial challenges. There have been multiple calls from businesses, industry and organizations who would like to see Victoria extend support to landlords.
When it comes to commercial properties, the Surrey Board of Trade would like the B.C. government to pay 60% of small businesses' rent up to $6,000 per month from April to June, in exchange for commercial landlords waiving the first $10,000 of commercial rent owed.
For residential tenants in arrears, Goodman would like to see the province to top-up their payments to help keep landlords whole.
To date, the B.C. and federal governments have not announced any kind of support measure for landlords facing a decline in revenue due to tenants not paying rent.
On Friday, Goodman principal Cynthia Jagger will discuss Goodman Commercial's findings in greater detail in a panel discussion hosted by the Urban Development Institute.