The coronavirus pandemic has pushed Deborah Pusatere to convert all her tenants’ one-year leases into rolling month-to-month agreements.
The landlord in upstate New York oversees 80 apartment units. When a tenant’s lease is set to expire, she offers them a more flexible contract to move out at any time with a 30-day notice.
“A lot of people are still losing their jobs,” Pusatere says. “They don’t know if their jobs are coming back. So I don’t want someone locked into the lease if they need to relocate to another state, or have to move for a job opportunity in a month.”
Pre-pandemic, there was great value and security in longer-term leases for both landlords and tenants. Under a typical year-long contract, residents have more time to make their space feel like home, while property owners avoid lost rental income and vacancy costs.
But that framework doesn’t make sense for some renters and landlords in a post-outbreak world where financial uncertainty looms over the economy. Property owners set on cutting losses say they are offering more flexible agreements than they have since the financial crisis. And tenants who want the freedom to move if the pandemic flares up are asking for terms and concessions that would’ve been out of the question before the coronavirus gripped the nation.
Much of the renters’ leverage stems from people temporarily fleeing urban centers for more rural pockets of the country, experts say. “There was a surge of new, short-term leases in the spring, and it was fear-driven,” says Candace Adams, the CEO of Berkshire Hathaway HomeServices for Connecticut, Rhode Island, New York and New England.
“There was an initial wave when COVID hit due to so many unknowns. Then, when the protests started in May, we saw many more people coming out into the suburbs looking for short-term rentals.”
Most residential leases are signed for one year at a time, with an opportunity to renew, experts say. However, data suggests that a shift is happening.
A July survey from the National Apartment Association found that two-thirds of landlords are offering shorter-term leases to at least 10% of residents during the pandemic. That’s up from a July 2019 average of 7.3%.