Affordable Rental Housing Providers’ Expenses Increasing, Rent Revenues Declining during Pandemic

The National Leased Housing Association (NLHA) and ndp analytics released the results of a survey of low- and moderate-income housing providers conducted in August, which asked them about additional expenses related to COVID-19, changes in rent revenue, and how the pandemic has affected their plans. Nearly three-quarters of respondents (74%) increased their operating expenses due to COVID-19, and 89% report a decline in rental income.

The survey was administered online to providers of low- and moderate-income rental housing. Among the 164 respondents, nearly half (46%) managed 1,000 rental units or less, while 26% managed over 5,000 units. Eighty-eight percent of those surveyed managed subsidized rental homes, which could include public housing/Section 8 project-based housing, Section 8 vouchers, and USDA rural rental assistance projects. Unsubsidized low- and moderate-income rental homes included tax-credit projects without rental subsidies and market-rate housing. Most respondents (63%) had a blended portfolio of subsidized and unsubsidized homes.

In order to adopt new health and safety measures, 74% of respondents have increased their operating expenses. Housing providers report spending additional money on air filtration, extra cleaning, personal protective equipment (PPE), and other health-related expenses for residents and staff. The average increase in operating expenses is 14.8%.

At the same time, 89% of respondents reported a decline in rent revenue due to COVID-19. The average decline in revenue is nearly 12%. Nearly 73% of housing providers said non-payment was a main cause of the decline, and 49% identified incomplete or partial payments as a reason. In order to accommodate households struggling during the downturn, 77% of respondents reported implementing flexible payment plans.

The authors note that the combined increase in operating expenses and decrease in revenue constrains how much can be reserved for capital expenditures and owner income. This financial strain could affect future housing projects: over 44% of respondents have postponed or cancelled plans to invest. The authors note housing providers may not be able to maintain their supply of rental housing with reduced rent revenue.

The full report can be found at: https://bit.ly/33jnIiu