California’s statewide eviction moratorium expired last week, but residents of Los Angeles county may still be protected against eviction proceedings if they are unable to pay rent due to hardships caused by Covid-19. As a result, many LA landlords are wondering what will come next and how they can best proceed. Should they keep their current tenants, even if it means having to create a payment schedule? Or should they move forward with evictions next year and have vacancies to fill?
According to Daniel Withers, senior vice president and senior director of multifamily at Matthews, an investment services and technology firm specializing in commercial real estate, landlords just want the rental market to return to normal. But until the moratorium expires, the bills are piling up.
“Landlords take on all the risk and liability, and all the rights go to the tenants,” Withers said. “Right now they have to sit and wait, but at the same time, they have to pay the property taxes and insurance, and the utility bills are going up. All of these things are weighing and there’s nothing that owners can do to push it through.”
Withers said that despite the gains made in the past few months, the SoCal market still has plenty of pandemic-driven vacancies, particularly in Hollywood and the Ventura Boulevard corridor. However, he said he believes that as things continue to pick up and people begin to return to offices, those vacancies will dwindle. This will give owners an opportunity to bring in new tenants, but they will need to consider making improvements to their building and amenity spaces if they want to stand out from the rest.
Withers said that some landlords may also prefer to work with their current tenants — even those who may be struggling to pay rent — especially if they have otherwise been good tenants and have been upfront about their situations.
“There are some people out there that have financial hardship and adversity, and I think landlords will want to work with those tenants,” Withers said. “But for the ones who are taking advantage of the situation, I think we’ll see the eviction process start pretty quickly.”
If landlords are striving to retain their current tenants, he said, they should also consider making some building improvements. This is a way landlords can go above and beyond during this difficult time while building the foundation for strong long-term relationships.
“Aside from going to a tenant and saying, ‘Hey, what can I do to help?’ it’s about providing a good product for them,” Withers said. “This helps to better retain them, or at least have some dialogue. Having good relations with the tenants usually goes a long way.”
If landlords do end up going through with the eviction process, California provides a checklist for landlords that contains updates to legal changes, explanations of landlords’ rights, what next steps can be taken should they choose to go to court and other information.
“There will be a heavy demand for evictions to take place, and I think it will be a function of if the courts can support that demand,” Withers said.
In Withers’ opinion, tenants who have been following the correct protocols and have been upfront with their landlords will likely have a better outcome than tenants who have been uncommunicative and unresponsive.
The expiration of the moratorium is likely to cause changes in the rental marketplace, but there are still some complicating factors, particularly regarding government relief. Withers said that while the state can provide a percentage of money per tenant for landlords who have put in paperwork, it may not come in right away. He also predicts that once tenants no longer receive unemployment benefits, it will be clearer what will happen to the market and overall operation for landlords.
“I think the big issue out of all of this is, what happens?” Withers said. “It’s kind of early to see what’s going to transpire.”
This article was produced in collaboration between Studio B and Matthews.