Rental Crisis Hits College Towns Thanks To COVID-19

Rental Crisis Hits College Towns Thanks To COVID-19
In January, Rita Slavin‘s daughter signed an ironclad lease on an apartment near the University of California, Davis, to secure housing for her senior year of college. There was no way Slavin could have known that just a few months later her daughter Nicole‘s college classes would be held entirely online. She also had no clue that she would be suffering financially, or that Nicole and her roommate would have lost their jobs as the coronavirus pandemic plunged the nation into a recession.

Now the young women are trapped for the next year in a $2,020-a-month lease, which began in September. And they can’t get out of the contract unless they can find new tenants to take their place.

“I’m definitely losing sleep over this one,” says Slavin, 54, a paralegal who lives in Los Angeles. “It’s really rough because so many kids are stuck with these leases they desperately can’t get out of. It’s nearly impossible to find someone to take over a lease when everyone’s trying to get out of a lease. We’re even offering incentives such as free furniture, we will pay the first month’s rent—anything we can think of to make it more appealing.”

The students moved out of the apartment in April when the school first moved classes online in response to the COVID-19 crisis. That means they’ll be paying nearly a year-and-a-half’s rent on housing they’re not occupying.

Slavin’s plight isn’t unique. Across the country, many college students signed leases months in advance of the fall semester, expecting to return to school for in-person classes. Unfortunately, things often haven’t played out that way.

Some schools, including Harvard and Rutgers, along with the entire University of California system, announced this summer they would be predominantly online for the fall semester. Other schools, like the University of North Carolina at Chapel Hill and Michigan State University, changed course and announced they would go online for the rest of the semester only after students began returning and a surge of positive COVID-19 cases followed.

That’s left many students scrambling to get out of pricey leases. In some some cities, roommates can be charged $750 to $2,000 a bedroom. In some areas, a four-bedroom house could go for $6,000 or $7,000 a month, says San Francisco–based tenants rights attorney Joseph Tobener.

“We’re talking about significant sums of money,” says Tobener, who receives about 20 calls a week now from students and their families.

Typically, a single renter or group of roommates sign the lease, which can be co-signed by one or more of the students’ families to guarantee it. So if other students decide not to move in or pay their share for the apartment, the student and the family on the lease can be on the hook for the full monthly rent—unless new renters are found. While some students kicked off campus prefer to stay with their friends near their schools, many others are heading home to their families.

Getting out of these contracts can be nearly impossible without a force majeure clause—basically an act of God clause—written into the original lease. Few contracts contain such a clause, and going to court is expensive, especially if the lease requires the tenants to pay their landlord’s attorney fees.

But Tobener doesn’t blame the building owners, who are faced with losing money on vacant units if they let tenants out of their contracts.

“The landlords often save up for years to buy units in these college towns, thinking it’s going to be a stable source of income, and then the bottom falls out,” says Tobener. “Nobody could have predicted this.”

In busy college towns like Davis, signing a lease in January or February is the only way most students can guarantee housing for the fall semester. Before the pandemic there was typically only a 0.5% to 1% rental vacancy, says Davis-area real estate broker Eugene Chang of College Town Realty. He specializes in rentals and property management.

However, with classes being held online there are now plenty of apartments and rental houses to choose from. He expects the vacancy rate to hit 10% by October. As a result of the lower demand, prices are falling. Tenants desperate to sublease their units are offering to pay $500 to $700 of the monthly rent to attract folks to take their spots.

“Because of the pandemic, fewer people want to live with strangers,” says Chang. “And fewer people are looking.”

In Chapel Hill, University of North Carolina senior Philecia Klein, 21, doesn’t know if she’ll be able to get out of her lease for her two-bedroom apartment in a subdivided house near the university. The public relations major had lined up a few roommates who all later fell through because they were nervous about committing to housing during the pandemic.

She signed the lease solo this spring and moved into the apartment in July. Last month, the school announced that in-person classes would be moved online after a COVID-19 outbreak.

Her father is liable for the full $1,040 a month, although Klein plans to pay him back. However, she doesn’t want to owe her father a year’s worth of rent when she can’t physically go to class and she can live at home for free. She also doesn’t want to be “stuck in the craziness of coronavirus” in the college town.

“There’s no hope in finding someone to fill that second bedroom now, so I might as well move home,” says Klein.

She’s not optimistic her father will be able to get out of the lease, but she still has mixed feelings about moving: “It hurts my soul to think I could leave this apartment.”

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