Average Rental Arrears in NYC Affordable Properties Increased 43% between 2019 and 2020

The NYU Furman Center released “Rent Payments in a Pandemic: Analysis of Affordable Housing in New York City,” a policy brief examining how rent payments and rental arrears changed for tenants residing in affordable housing properties in New York City. The analysis focuses primarily on renters in below-market-rate units in buildings financed with Low Income Housing Tax Credits (LIHTC), about half (56%) of whom receive subsidies that further lower their portion of the rent. The authors found that while monthly payment rates after March 2020 remained at or above 90%, the number of households in extreme debt more than doubled. The average rental arrears for tenants that owed rent increased by 43% between September 2019 and September 2020, to $2,871.

The New York State Association for Affordable Housing (NYSAFAH) provided the authors with rent ledger data, which tracks tenant payments and charges, on 18,632 units in New York City. Seventy-two percent of the homes in this sample are in the Bronx or Brooklyn, and 77% are in buildings with at least 50 units. The affordable housing developments include projects built using the Low-Income Housing Tax Credit (LIHTC) as well as some rent-regulated buildings. The LIHTC program finances the construction, rehabilitation, and preservation of affordable housing by providing a tax credit to investors. Rent-restricted units in LIHTC properties have fixed maximum gross rents and are available to low-income households (see the Advocates’ Guide, p. 5-17, for more information on LIHTC).

Rent payment rates were lower in 2020 than in 2019, resulting in a larger accumulation of rental arrears in 2020. Between March and September 2019, 98% of the total rent charged across all units was paid, while during the same period in 2020, 95% of the total rent charged was paid. The authors stress that any decline in payment rates contributes to increasing rental debt.

Despite high monthly payment rates, the authors found a large share of tenants had some rent debt. Before the crisis, in 2019, the share of tenant households with some amount of rental arrears hovered around 50%. This might suggest low-income renters are unable to pay off lingering debts that result from previous emergencies, even when their situations stabilize. The share of households with rental arrears increased from 52% to 55% between September 2019 and September 2020. Total rent arrears increased after the beginning of the crisis in March and again in August, after the expiration of extended federal unemployment benefits. Most renters in arrears in 2019 and 2020 owed between $100 and $2,000. The average rental arrears for tenants who owed rent increased in 2020 by 43%, to $2,871. The number of households who owed more than $10,000 in rent, which the authors label “extreme rental arrears,” increased by 108% between September 2019 and September 2020. The 650 households with extreme rental arrears accounted for half of the total rent owed by September 2020.

Approximately 56% of the households in this sample received further subsidies that lower their portion of the rent—for example, Housing Choice Vouchers. Those additional subsidies depend on tenant income, unlike fixed LIHTC rents, and so they may provide an additional buffer in a crisis. The authors found that the decline in payment rates after March 2020 was much smaller for these subsidized households than for those who did not receive further subsidies.

The policy brief is available at: https://bit.ly/3bV9AAD