This past Thursday, TurboTenant released its 2021 “State of the Rental Industry Report,” highlighting rental industry trends related to rent payments, evictions and rent relief.
The report included survey data collected from landlords and renters throughout 2021, and found that most landlords are individuals who own just a few units. As a result of this data, with Pew Research Center reporting 14.1 million individual property investors, TurboTenant says that mom-and-pop landlords made up the majority of those surveyed.
Key findings include:
- Landlords with 1-4 units simultaneously received the most amount of full rent payments, and most amount of missed rent payments.
- 25% of renters reported spending 50% of their income on rent in December, compared to the standard recommended 30% rent-to-income ratio. 49% stated spending between 30% and 50%.
- 53% of landlords reported plans to raise rent prices in 2022.
- 43% of landlords had an institutional investor ask to buy their home in 2021.
- Cash rent payments decreased by 35% from January to December. Money transfer platforms i.e. ACH transfer, digital wallet or rent payment platforms are most popular at 41%.
- While only 7% of landlords said they had filed an eviction due to nonpayment in September, that number grew to 17% in December.
- The national median rent price has increased 16.4% since January, rising faster than before the pandemic.
While the percentage of landlords that received full rent payments remained steady for the first quarter of 2021, the survey finds that this figure improved dramatically in the summer and declined throughout the fall.
October was an exception, with only 71% reporting they received full rent payments during the Halloween month.
In contrast with this overall rental industry theme, the report found that single investor properties (those mom-and-pop landlords previously described) continued to receive a high level of full payments throughout the year, with 75% of this segment reporting full rent payments from August to November.
The number of landlords receiving zero rent payments was at its lowest in April at only 2%, and peaked in January and October. TurboTenant says that while it is difficult to attribute a reason for fluctuations in zero rent payments on a month-to-month basis, they believe federal eviction moratorium extensions and rent relief access could play a role.
For every month of 2021, when compared to landlords with 5-10 units, 11-20 units and 21 or more units, landlords with one to four units simultaneously received the most amount of full rent payments and the most amount of missed rent payments.
So how did landlords deal with renters that could not pay their full month’s rent?
The rental industry report found that the majority of renters set up a payment plan with their landlords, leading options such as “negotiated rent with landlord” or “landlord started eviction proceedings.”
This settlement approach saw increased usage throughout the year, with 37% of those surveyed saying they set up a payment plan in January and over 70% saying they had in December.
As far as actual payment methods, money transfer platforms were the most popular option for rent payments, with 41% saying they used ACH transfers, digital wallets or rent payment platforms. Checks were the second most popular option at 22%; cash became increasingly less popular throughout 2021, dropping from 31% usage in January to 20% in December (a 35% decrease).
Looking at the amount spent on rent, it seems that rent is rising in general, with 53% of landlords reporting plans to raise rent prices in 2022.
The percentage of individual’s income that is spent on rent is also increasing, with 25% of renters reported spending 50% of their income on rent in December, compared to the standard recommended 30% rent-to-income ratio. Forty-nine percent stated spending between 30% and 50%.
A significant amount of renters also reported having to dip into their personal savings to make on-time rent payments, with 43% saying they had to use savings for rent in February. While this decreased to 22% from March through May, the 27% who reported taking on debt to cover their rent payments in December is also concerning.
Another concerning finding related to high rent payments and renter’s inability to pay on time is the lack of rent relief program awareness. Since April 2021, over 50% of renters reported that they were unaware of federal or state emergency rental assistance programs.
92% of renters in December reported their landlords had not provided them with information regarding rental assistance or how to apply for rent relief. Despite this lack of awareness, 16% of renters did apply for assistance (compared to 14% of landlords), underlining the need for rent relief.
In fact, even among tenants who were able to make full rent payments, many still owed landlord rent from an earlier date. Twenty-nine percent of landlords reported they were owed back rent.
While most landlords reported owed amounts between $1,000 and $2,000, several landlords said they were due between $25,000 and $50,000. Despite this, only 0.5% of landlords reported being in mortgage forbearance and only 1.7% of landlords reported selling their home to avoid foreclosure.
Suburban vs. Urban vs. Rural
Another interesting aspect of the report focuses on the differences between suburban, urban and rural landlords. The report found that rural landlords reported the most amount of zero payments throughout the year, peaking at 15% in June, with urban landlords reporting the highest percentage of partial payments in December.
During this month, only 60% of urban landlords received full payments, with 32% receiving partial payments. To highlight this trend, Colorado landlords consistently reported the most full rent payments (73% in January, 88% in December), while New York reported the highest percentage of missed rent payments (20% in January, 28% in December).
That equates to a 40% increase in missed payments for New York landlords from the year’s start to end.
While a “wave of evictions” was expected to follow the end of the CDC’s federal eviction moratorium in August 2021, the survey found this did not happen. However, the survey did find the number of landlords filing for eviction due to nonpayment of rent is gradually increasing.
While only 7% of landlords said they had filed an eviction due to nonpayment in September, that number grew to 17% in December. Ten percent of landlords stated they were currently in eviction proceedings.
On the flip side, 4% of renters said they moved out of a rental property in November and December because they were anticipating eviction. Of those that did move out, 21% anticipated being evicted due to nonpayment of rent.
This highlights a growing challenge for landlords in need of cash flow, a segment highlighted in those with 1-4 units.