Staying afloat in a time of Covid-19 for tenants and landlords

[A version of this article first appeared in Ottawa Business Journal]

Since the dawn of the industrial age in the early 1700s when Thomas Newcomen produced the first successful steam engine (later perfected by James Watt in 1769), there has never been a major economy that contracted by 40% in a single quarter. This happened in China during the first three months of 2020 due to a lockdown of much of that nation because of Covid-19.

Not even the Great Depression of 1929 to 1933 can compare. It took nearly four-years for industrial production in the U.S., Germany and Canada to match that drop.

It’s possible that Canada’s GDP and employment may fall by 40% in the next three months.

Having said this, I am absolutely confident Canada and Canadians will find a way through this. To paraphrase Sir Winston Churchill, we must never, ever, ever, ever, ever surrender. Or to quote my late father, Professor O.J. Firestone, we must “stick together.”

A client of mine rents an apartment to three young people (all servers) who lost their jobs last week. None of them have any income now. Zero. Zip. However, my client reduced their rent for the next four months by half (they should be able to catch up over the following year by paying a bit more each month). I also asked him to pass along to his tenants a recent announcement by our prime minister that the Canada Emergency Response Benefit (CERB) will allow applicants to receive $2,000 monthly for the next four months for those who have lost their incomes during this pandemic. The two question, no-hassle application form should be available online as of April 6^th, with funds flowing 10-days later, according to Canada’s finance minster.

[Please note the CERB is actually $500 per week, which works out to $2,166.50 a month on average, a bit more than the $2k everyone is quoting.]

Other landlords I coach have offered their tenants this—to pay ½ their rent on the 1^st of each month and the balance on the 15^th or later (depending on when they qualify for CERB and when they actually receive those funds). Another landlord I know is offering some of his harder hit tenants the option to apply their LMR (last month’s rent) to this month. It’s not strictly legal (ie, not permitted under Ontario’s RTA, residential tenancy act) but in a crisis, you do what you can to help your fellow human beings. Creative solutions are everywhere.

Another client of mine, a dentist, recently opened her practice in west end Ottawa. Her fitup cost? Close to $2 million. She, like all dentists across Ontario, has been ordered by her regulator—the RCDSO (Royal College of Dental Surgeons of Ontario)—to close (except for emergencies). She now has no income. Distraught, she reached out to her landlord who said, “No problem, full rent deferral until this crisis passes.” Bravo.

I am encouraging you to do what you can to help yourself, your family and your fellow citizens by:

1. preserving cash

2. arranging for a HELOC, home equity line of credit, or other form of mortgage or credit financing

3. deferring tax payments

4. negotiating mortgage payment deferrals due to Covid-19 (not to mention rent deferrals or reductions for both residential and commercial tenants).

Even though two of the first Canadians to ask their banks (you know who you are!) for mortgage deferrals were refused (until, that is, CBC National News stepped in, whereupon, miraculously, those two banks hastily reversed those decisions), I cannot foresee any circumstances under which foreclosures or powers of sale initiated by lenders in Canada against homeowners or apartment building owners, or evictions by landlords, will be successful at this time. What? We want to make 40% of Canadians homeless. Not a chance.

What will the future bring now?

No one really knows. But one thing occurs to me: It’s time to make our nation, our cities and ourselves more resilient and self-sufficient.

How do we do that? I say change Ottawa’s Official Plan (a new one is due out in 2021 but that may be delayed). Maybe we should follow Barcelona’s example—their vision is to become completely self-sufficient by 2050:

-in energy

-in food

-in waste

-in textiles

-in manufactured goods (e.g., 3D printed cell phones)

-in services (think finance, loans, insurance…)

-in meds …

They even want their own Barcelona currency to promote buying locally. Oh, by the way, we already have the Calgary dollar, a Salt Spring dollar and the Kawartha loon. So, why not an O-town dollar?

If we are truly serious about building greener, more environmentally sensible cities, let’s stop fooling around. If someone wants to build yet another soulless, mono-cultured office tower with windows that don’t open, bad air and horrible fluorescent lights in your town for, say, 500 workers, don’t let them… unless, that is, it also includes 500-microsuites, so people can live and work in the same place.

This is part of the FEJAH (for every job a home) movement, which is a riff on Quebec-based architect Isabelle Bradbury’s FEHAJ (for every home a job) idea.

And while we are talking FEHAJ, how about letting people and communities become more self-sufficient by introducing additional flexibility in the way we use our homes? Ottawa is already heading down a path first blazed by Rotterdam when it pronounced itself an “experimental city.”   

“Europe’s largest port–threatened by rising waters and a loss of its major industry–has reinvented itself as a playground for innovative thinkers who are trying to create a resilient city of the future,” said Adele Peters in 2016, https://www.fastcompany.com/3060998/experimental-city-how-rotterdam-became-the-world-leader-in-sustainable-urb

At present, Ottawa permits backyard coach houses, in-home apartments and tiny micro retail shops catering to local pedestrian traffic. How about allowing more backyard workshops/makerspaces for an emerging gig-based economy and encouraging the re-emergence of backyard homesteading? I mean, it wasn’t that long ago that nearly everyone grew much of their own food in large home-based gardens. You’ve heard this before, “God only helps those who help themselves.” Well, let’s all of us be more self-reliant.

Finally, we also need to be humbler about human frailties and capabilities, and treat each other and the planet with more respect and love…

BE WELL, EVERYONE

Bruce M. Firestone, PhD, is a founder of the Ottawa Senators, a Century 21 Explorer Realty broker, real estate investor and business coach. Follow him on Twitter @ProfBruce or email him at bruce.firestone@century21.ca.

Image source: BiblioArchives / LibraryArchives – https://www.flickr.com/photos/28853433@N02/19086236948/, Public Domain, https://commons.wikimedia.org/w/index.php?curid=41991931