Landlords battle rent strikes across the U.S.
Property owners are organizing and counteracting as the national “cancel rent” movement gains traction
As the “cancel rent” movement gains traction from New York to Kansas City, property owners are organizing and counteracting
Holding a yellow rope to keep six feet apart, tenant advocates in Missouri slowly wound their way to the governor’s mansion in April.
After a series of virtual demonstrations, and even a protest where activists parked on the shoulder of a major highway between Kansas City and St. Louis, the advocates were calling on Gov. Michael Parson to suspend rent and mortgage payment obligations and halt evictions statewide. The group, KC Tenants, carried a large poster labeled “Eviction Notice” and attached it to the mansion’s front gate.
“We are taking a risk because we have no other choice,” said Wilson Vance, one of the group’s tenant organizers, about the escalation from virtual to in-person demonstrations. “The stakes are just really high, so it’s time to turn the heat up.”
Similar protests have sprouted up across the country as unemployment claims surge to more than 33 million since March and tenants find themselves unable to pay rent. According to We Strike Together, an organization that has been tracking the national movement, more than 190,000 rent and mortgage strikes have surfaced since the pandemic hit.
It’s not clear how many tenants have withheld rent, but the data available paints a somewhat promising picture for property owners. Roughly 80 percent of 11.4 million households surveyed by the National Multifamily Housing Council reported that they paid all or part of their rent by early May, according to the landlord trade group. But multifamily lenders have reported significant declines in collections, especially among lower-income tenants.
Washington’s Coronavirus Aid, Relief and Economic Security Act has provided some help to tenants by sending out stimulus checks and supplementing unemployment benefits by $600 a week through July 31.
While advocates argue this relief doesn’t go far enough, real estate groups counter that little has been done for landlords, who have temporarily lost the ability to evict tenants in several states including New York, Florida, California, Pennsylvania and Colorado.
And as state governments face mounting pressure from advocates and elected officials to respond more boldly to the pandemic, property owners face not only rent shortfalls, but uncertainty over whether they will receive relief if rent strikes gain traction.
In response, landlords have lobbied for breaks on property tax and mortgage payments. And in the extreme, even threatened to withhold property tax payments to put counter pressure on elected officials.
“It all trickles down. Rent pays the landlord, who pays the property taxes, which pays for our first responders,” said Diamelyn Cepero, a real estate attorney in Miami. “Ultimately, all tenants are going to need to pay.”
Calls for a mass rent strike
started to emerge in several cities in April. In New York, the tenant coalition Housing Justice for All set out to coordinate the efforts of financially-strapped tenants to pay rent and target buildings owned by specific landlords
, including Related Companies and Kushner Companies. The group deemed that these and other owners could weather the financial hit.
“Tenants are unable to pay rent, period,” Cea Weaver, a tenant organizer with the group, said during a video panel
hosted by The Real Deal
in early May.
“When we say rent strike,” she added, “what we are saying is that we’re turning a moment where people cannot pay into a moment of political activity and turning our individual inability to pay into collective action, calling on the government to intervene.”
On the same panel, real estate developer Francis Greenburger countered that point.
“People who are without need — to give them relief is nonsensical,” said the longtime developer and industry advocate. “Let’s identify the real needs, and let’s address them though government help, through private help, rather than some blanket approach that makes the problem five times worse than it is.”
But the tenant movements are gaining momentum. The New York petition now has more than 15,000 signatures. And a national rent strike map has documented nearly 200,000 actions, according to Maurice Weeks, co-executive director of the advocacy group Action Center on Race & the Economy.
In Pennsylvania, the Philadelphia Tenants Union decided in favor of a strike but not all of its members agreed that it was the right strategy. Some said that younger, more left-leaning members pushed through a vote without sufficient debate, arguing that tenants who withheld rent, especially poor tenants of color, would be vulnerable to repercussions.
In the end, although four members of the Philadelphia Tenant Union abstained from the vote, the measure to strike passed overwhelmingly.
A growing number of landlords around the country are now seizing on the strikes — a tactic ordinarily used by renters to demand repairs and improved building conditions or combat tenant harassment when all other efforts have failed — calling them political opportunism.
“They are looking to change the housing industry. Nothing they are doing helps the tenant today,” said Stacey Johnson-Cosby, president of KC Housing Alliance, a landlord group in Kansas City. “They are sacrificing all those people in the name of social movement.”
Real estate groups have also repeatedly recommended that tenants work out repayment plans with their landlords. Johnson-Cosby, who owns 20 apartments in the Kansas City area with her husband, said most of her tenants have paid rent in April and May. Her organization has pitched a temporary eviction-prevention program to the city that would provide a one-time payment of $2,400 for the year to tenants unable to pay their rent due to illness, unemployment or familial crises or any combination of those.
“If I have formerly homeless veterans getting their rent paid, that tells me something,” she said.
Other landlords argue that the growing rent strike movements and calls to cancel rent around the country — the latter of which has received support from U.S. Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders — will come back to bite tenants, property owners and even state and local governments.
One online petition headlined “Property Tax relief or Tax strike,” for example, now has more than 4,000 signatures supporting a call for the city’s landlords to withhold their property taxes
. The Change.org petition blasts politicians for enabling tenants to not pay rent even if they can.
Despite that accusation, New York State Sen. and Housing Committee Chair Brian Kavanagh defended the steps the state has taken. The eviction moratorium is a necessary measure to keep renters from choosing between their home and their health, he said, but should not be confused with a “rent holiday.”
“People have an obligation to pay rent — if they can pay their rent they should,” said Kavanagh. “Similarly, it’s not responsible for property owners to make a point by declining to pay real estate taxes.”
But some say there’s little that can prepare the real estate industry for the potential impact of widespread rent strikes. Even landlords, lenders and property managers relieved by April’s rent collections know that things could fall apart in May.
That’s what Gregg Gerken, head of commercial real estate at TD Bank, foresees — and he warned that financial distress will accelerate if tenants with the means to pay rent withhold it.
“I get concerned with rent strikes,” Gerken, who oversees a $41 billion loan portfolio in the U.S. and Canada. “People are misusing the terms ‘rent deferral’ and ‘rent forgiveness’,” he added. “That’s not what the CARES Act was meant to do. It was meant to help people who need help.”
Questions of authority
Over the past two months, cities and states have handled evictions and calls for rent suspension differently.
While New York halted some evictions for non-payment of rent through mid-August
and the city’s rent board recently cast a preliminary vote in favor of freezing rents
, other cities and states have left key decisions up to local courts. So far, most local and state governments have shied away from suspending rent or mortgage payment requirements.
In April, the Denver City Council urged the state to suspend rent and mortgage obligations, but Colorado Gov. Jared Polis has asserted that he doesn’t have the legal authority to do so. In a statement to media outlets at the time, a spokesperson for Colorado’s governor indicated that he couldn’t interfere with private contracts. The United States Constitution bars state intrusion into contracts.
Attorney Andrew Pincus, a partner with Mayer Brown who focuses on Supreme Court and state and federal appellate cases, said a temporary suspension of rent would have a better chance of surviving constitutional scrutiny if relief is offered to landlords as well.