Landlord Caution: Rethinking Tenancy Approvals After Pandemic-Related Evictions

During the height of the pandemic, many landlords faced unprecedented challenges, especially with tenant payments. One of the most significant issues was the upsurge in non-payment-related evictions. As the situation evolves, landlords are now facing new decisions on whether to accept tenants who may have faced eviction issues due to financial strain brought on by the pandemic. This article aims to provide insights into the challenges faced by landlords and how they are adapting to these new circumstances.

The Pre-pandemic Screening Process

Before the pandemic, landlords conducted extensive background checks, including eviction history, to ensure their tenants were reliable and financially responsible. Unfortunately, some tenants made false claims about their eviction history to avoid scrutiny. For instance, a case in point involved a couple who lied about having never been evicted. Upon presenting evidence of their deception, they attempted to negotiate a deal by offering to double the deposit and pay one year's rent in advance in exchange for a three-year lease. Despite the offer, the landlord politely declined and sought other prospective tenants.

The Current Landscape and Future Scenarios

The post-pandemic landscape requires landlords to rethink their tenancy approval processes. The primary challenges include:

Bigger Deposits and Prepaid Rent: Landlords are likely to demand larger deposits and require more prepaid rent to mitigate the risk of non-payment. Tighter Income Requirements: Income checks may be more stringent to ensure tenants have a stable financial background. Due Diligence on Eviction History: Thoroughly investigating any potential evictions becomes even more crucial.

Landlords anticipate that these measures will become the new norm, possibly lasting a decade. This shift is driven by the unpredictable and unprecedented nature of the pandemic and its impact on tenants' financial stability.

Adapting Business Models

Landlords who deal with the higher-end market often have a competitive edge in implementing such strategies. For example, the author of this article operates in a niche market with no real competition, allowing them to raise rents and deposits without significant resistance. This business model has provided a buffer against financial uncertainties. However, even with a solid financial buffer, the author acknowledges the potential for severe impacts if the eviction moratorium is extended. They have prepared plans to either weather the storm or exit the market entirely.

The New Tenant Approval Criteria

Going forward, landlords are expecting even stricter criteria for new tenants. These include:

Minimum Financial Stability: New tenants must demonstrate a four-times-the-rent income and savings to cover three months' rent. Direct Communication with Previous Landlords: Potential tenants will need to undergo direct communication with their previous landlords to verify their payment history and behavior during the pandemic. Insurance and Financial Preparedness: Tenants should be prepared to cover routine and unexpected expenses with funds from insurance, if available.

Despite these stricter measures, the article highlights the importance of adopting a more lenient and understanding approach towards tenants who were genuinely affected by the pandemic. The author acknowledges that the reputation and behavior of tenants during the crisis should be thoroughly evaluated to prevent future non-payment issues.

In conclusion, the current situation requires landlords to exercise caution and thoroughness in their tenancy approval processes. By adapting to the new landscape and implementing stricter measures, landlords can better protect themselves against the risks associated with non-payment and evictions. This shift is crucial for the long-term sustainability of the rental market.