The COVID-19 pandemic has laid the foundation for a future rental crisis. Landlords are tightening their screening criteria, which means renters who have been evicted for any reason will have a much harder time finding a new place to rent. The housing supply shortage has made things worse, causing rental prices to increase across the board. Even tenants who have not been evicted but who moved by choice or left involuntarily are likely to face much higher rental payments.

We partnered with Avail, an online platform that provides rental management tools for do-it-yourself landlords, to survey landlords and tenants about the challenges they’ve faced during the COVID-19 pandemic. Our new analysis of the landlord data, from the January 2022 survey, includes responses from more than 1,100 landlords nationwide, of whom more than 70 percent owned no more than four properties. These data painted a picture of the difficulties ahead for both landlords and tenants.

Although the eviction rate fell, landlords have used other methods to vacate tenants

The number of evictions has fallen during the pandemic, largely because of the federal eviction moratorium and state and local moratoriums. Despite the federal moratorium, landlords could still evict tenants who created a nuisance, and 38 percent of landlords who missed rental incomes initiated eviction proceedings.

But eviction is not the only way to vacate units. Survey data show that for landlords who missed rental income because of tenant nonpayment, 59 percent encouraged the tenant to vacate the property, 27 percent did not renew the tenant’s lease, and 22 percent mutually terminated the lease.

With the federal moratorium now lifted, landlords may evict their tenants directly. In the next three months, 44 percent of landlords whose tenants missed rental payments said they are considering encouraging tenants to vacate the property, with close to 60 percent of them thinking of initiating eviction proceedings. The majority of landlords (51 percent) said it would take two to three months to trigger an eviction, but more than a third were willing to trigger an eviction after only one month of missed rent. Although we do not expect an eviction tsunami, these numbers suggest eviction numbers could rise substantially in the months ahead.

Landlords have become more stringent on tenant screening

Overall, 39 percent of landlords said they are now using more stringent screening criteria, and landlords who have missed rental payments are becoming especially cautious, with 49 percent of these landlords tightening screening criteria, versus 32 percent who did not miss rental income.

Most landlords said they use income and job history, rental history and evictions, credit history and credit score, and criminal backgrounds when screening rental applicants. Income, job history, and previous evictions were the most common, with close to 90 percent of landlords saying they check these criteria. Among these criteria, landlords most frequently cited previous eviction as the factor they were most concerned about, followed by level of income and late payments.

In an increasingly competitive rental market, stricter tenant screening will create higher barriers to finding housing, especially for renters who have previously struggled to make on-time payments or have been evicted. Almost 18 percent of landlords said they reject more than 75 percent of their tenants, and 56 percent reject at least 25 percent of their applicants. Only 12 percent of all landlords never reject applicants.

Landlords who missed rental income are more likely to increase rents by higher percentages

About 65 percent of landlords said that they would increase rents within the next 12 months, in line with soaring rent prices nationwide. We find that landlords who have missed rental income are more likely to increase rent and plan to raise it by a larger percentage, indicating they are looking to recover some financial losses. Landlords who have missed rental income were 8 percentage points more likely to raise rent compared with those who have not missed any rental income.

Landlord satisfaction was named one of the largest determinants of rent increases, with a tenant’s pay history heavily factoring into a landlord’s satisfaction. About 68 percent of landlords who did not lose rental income said they were very satisfied with the relationship with their tenants compared with 36 percent of those who missed rental income. Satisfied landlords are less likely to increase rent and are more likely to implement small increases.

A faster distribution of emergency funds could mitigate the effects on renters

Although the speed of Emergency Rental Assistance (ERA) distribution has increased, we find that almost 30 percent of landlords who have applied for ERA are still waiting to receive assistance. Additionally, in places like DC and New York that have exhausted all funding, significant needs still exist, suggesting that funds should be reallocated flexibly to meet the demand. 

The results of this landlord survey point to a bleak outlook for the rental market in the years ahead. Although landlords have been unable to evict tenants for much of 2021, they have often found other ways to vacate units, and evictions are likely to pick up in the months ahead. With more stringent landlord screening, tenants who have been evicted are more likely to get rejected for the rental unit of their choice. Ensuring that those who need ERA receive it in a timely fashion can help these renters find a home and combat skyrocketing rental prices. But even with more assistance, the effects of the COVID-19 crisis are likely to linger in the rental market for years to come. 

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