There are concerns with the Oahu rental housing market because of wage reductions, job losses, business closures and uncertainty for the future of Hawaii’s economy.
In a survey conducted by the Honolulu Board of Realtors, 38% of the realtors surveyed report that some tenants were unable to pay rent in June. This has not been the experience of the majority of property managers and landlords, but it is a problem that needs to be addressed. In this article, we will provide some of the policies put in place to assist both tenants and landlords in dealing with the present crisis and what you can expect as an investor going forward.
According to Section 4024 of the CARES Act, there is a temporary moratorium on eviction filings as well as other protections for tenants in certain rental properties with federal assistance or federally related financing. This protection covers properties that receive federal subsidies such as public housing, Section 8 assistance, USDA rural housing programs, and Low Income Housing Tax Credits, as well as properties that have a mortgage issued or guaranteed by a federal agency (including FHA and USDA) or Fannie Mae or Freddie Mac. These protections are designed to alleviate the economic and public health consequences of tenant displacement during the COVID-19 outbreak. For a period of 120 days, beginning on March 27, 2020, and continuing through July 26, 2020, in Hawaii, an owner cannot:
- Make, or cause to be made, any filing with the court of jurisdiction to initiate an eviction (e.g., an unlawful detainer action, complaint) for non-payment of rent or other fees or charges; or
- Charge fees, penalties, or other charges to the tenant related to non-payment of rent.
- Landlords must provide at least 30 days notice to vacate the premises but this cannot occur until after July 26th.
If an owner did not provide the tenant with an eviction notice, including but not limited to a notice to vacate, quit, or terminate tenancy, for nonpayment of rent or other fees or charges before March 27, 2020, the owner may not issue such notice until after July 26, 2020.
According to the State of Hawaii Guidelines for Owners and Renters, a 30-day notice can not be issued until July 26th. Although the Governor’s Proclamations take precedence, you should still understand the basic rules of the Landlord Tenant Code.
- Tenants are not absolved of their legal responsibilities to pay rent. Tenants who do not pay rent during the eviction grace period may still face financial and legal liabilities, including eviction after the moratorium ends.
- If the rent increases were agreed to in writing by the Tenant prior to the Proclamation, the increases may take place pursuant to the written instrument.
- If an eviction notice is validly issued by the court a Tenant is subject to eviction, however, the Sheriff’s Division of the Department of Public Safety, which often assists Landlords with the lawful removal of Tenants and their possessions, has stated that it will not be assisting anyone in the eviction process until further notice.
Rental Assistance for Households Affected by COVID-19
There are various organizations that are providing assistance to tenants who are both privately and publicly funded. The following are links to available sources:
- Aloha United Way COVID-19 Rent & Utility Assistance Program
- Catholic Charities COVID-19 Rental Assistance
- DHHL’s COVID-19 Emergency Rental Assistance Program
Landlord Assistance During COVID-19
An article on the front page of the Star Advertiser (6/21/20) mentions local agencies urging the State to boost aid for those facing eviction due to the pandemic. According to the U.S. Census Bureau, close to 20% of Hawaii’s households have either been unable to pay their housing payment or have “slight or no confidence that their household can pay next month’s rent or mortgage on time.”
Presently, there is no Landlord assistance program but a coalition us urging State lawmakers to consider a landlord subsidy program, using state or federal (CARES Act) funds to cover up to 20% of monthly rent for tenants affected by the pandemic that would be available to landlords who agree to reduce rent by 20% and also refrain from evictions for a set period.
Investing In Oahu Real Estate Going Forward
There will be ongoing effects of the coronavirus on the Oahu rental housing market beyond 2021 even when an effective vaccine is available. The rental market recovery is likely to mirror the economic recovery of our State which is anticipated to be a slow process taking up to 6 years. Yet, despite the challenges both tenants and landlords are facing now, it is important to have a long-term approach to investing, taking into consideration Oahu’s price appreciation as well as rental income returns.
For more information about investing in Oahu real estate please contact an agent with ChaneyBrooks Choice Advisors.