Coronovirus Response, March 31 – 2

So I wrote a blog post, “9 Things Canadian Governments Can Do To Avoid A ‘Social Distancing’ Economic Tragedy.” In it, one of the goals of my proposed solutions was to reduce, or altogether eliminate, people’s rent. Then I asked myself: But what can I do?

As it turned out, this was something, as a landlord, I decided I could afford.

‘Everyone with profit ought to figure out a way to use it to help other people’

I’m very lucky that the money I make on my rental property is extra income I can get by without.

Altogether, my tenancies produce about three months of profit a year, at about $6,500 a month. That money is better left in my tenants’ hands than in my bank account, right now. So, on March 18, I wrote them and told them I was waiving rent.

This isn’t something they asked me for, but I know the ones who are freelancers have more uncertain incomes, while the others are a bit more secure. I don’t believe this should be case-by-case situation, in which we ought to have people apply for help, or decide who should or shouldn’t get their rent waived.

B.C. just announced a $500 rental rebate to landlords on behalf of renters to help out. The federal government is planning to send $2,000 each month to Canadians affected by the virus. Directionally, that’s the way to go. Trying to parse who needs it and who doesn’t is just too hard given the urgency — April 1 is coming really fast. This is a situation in which everyone who has profit ought to be figuring out a way to use it to help other people.

And so in my note to them, I didn’t ask and I didn’t care whether they had the money to pay the rent. Instead, I wrote that, if their salary was secure, then they should consider using whatever surplus they have to spend locally and help keep people employed.

Postponing rent isn’t a solution

Say you’re renting a one-bedroom apartment in Toronto. Your rent is probably somewhere between $1,500 and $2,500. If rent were simply postponed, you’d come out of this thing with between $4,500 and $7,500 in debt.

You owe that money. But where is it going to come from? Who do you know that has three months of rent just sitting around in their bank account? Something like 40 per cent of all people don’t have enough money to deal with a $400 emergency. And that was before this crisis.

In Denmark, they’ve closed their economy. For the next three months, they’re going to pay 75 per cent of everyone’s income and they’re paying the fixed costs of small businesses that had to shut. It’ll cost them an extraordinary amount of money — 13 per cent of the GDP, which would be something like $300 billion here in Canada — but they’re going to shut the economy down, and they’ll actually have one to come back to.

I keep thinking about that. Sure, it’s a lot of money. But what are we going to come back to if we don’t act? Boarded-up neighbourhoods?

How have we allowed this to become a fight between landlords and tenants?

Landlords have a clear responsibility not to kick out their tenants in crisis — not that there’s a realistic way to kick people out. But I would pose a different question: How is it that, in a public health emergency, we’ve allowed this to become a fight between landlords and tenants?

It’s highly unlikely that the cash transfer will be enough to cover everyone’s expenses, especially in Toronto or another urban centre. So I certainly understand why people are banding together over this thing.

I’ve already been in touch with Joe the Dog Walker, the guy who launched a petition asking the government to freeze rent payments. It’s been signed by more than half a million Torontonians, and he said my post was actually the inspiration for his campaign.

Here’s the thing. This isn’t a situation where there’s a clear good guy and bad guy. It’s a situation of how we, as a society, can figure out how to share this burden equally. If I was a tenant, I’d be pissed. If I was a landlord whose tenant refused to pay, I’d be pissed. Landlords have mortgage payments, too, and the deferrals the banks are offering aren’t as easy to get as tenants seem to think they are. It’s a case-by-case thing.

I’ve heard some good stories about what landlords are doing to help, but I’ve also heard some bad ones. Many are willing only to defer, rather than waive or reduce, rent, and are asking for interest as well. A few reached out to me asking for advice after reading my blog post and tweet thread. What I’ve said is this: many of your tenants have suddenly and unexpectedly lost their entire income. That isn’t your fault, but it’s not theirs either.

They didn’t show up late, or do a bad job. It’s just gone. So if you insist that, despite all that, you should get every last penny of your income, plus interest, do you consider that fair?

This is a burden driven by a public health emergency. No one group should suffer most because of it.

What I’m doing isn’t particularly practical. It’s not a real solution. It’s not something every landlord can or should do. Many, a lot of them seniors, rely on rent for their own livelihood. Some landlords have complained that they’ve been asked to reduce rent, when banks aren’t willing to reduce their mortgages. This is completely fair — the banks should be doing much more. But any reduction at all helps, and I’d encourage people to reduce rent as much as they can afford.

April 1 is going to be terrible. Everyone faces tough choices. I’m assuming no solution will have been found by then. But all levels of government and our major banks then have a few weeks to figure out an answer about rent before May 1.

I know there are some smart people across the government who are working their asses off right now. I know people at the banks are trying to figure this out. It’s a complicated problem. But people aren’t interested in jurisdictional problems, bank shareholders or federal-provincial challenges right now. They just want a solution. And they’re going to expect our leaders to find one.

We’re in a wartime, and in a wartime, you have to do things that aren’t easy.