Balancing Eviction Prevention and Property Financial Health

With a national shortfall of over seven million affordable units, and record levels of people burdened by housing costs, it is critical to both preserve the financial viability of our affordable housing stock and ensure that residents who struggle to afford housing can be supported to remain stably housed and avoid eviction. NHT has piloted approaches in our own portfolio that strive to balance these needs and has identified opportunities across 53 Qualified Allocation Plans (QAPs) to drive better outcomes for housing providers and for residents.

Advancing housing stability – at both the property and household levels -- is imperative to the health and well-being of neighborhoods and communities nationwide. For low-income renters, temporary lapses in income due to job loss or savings loss due to unexpected health crises can quickly spiral into nonpayment of rent and ultimately eviction, catalyzing cycles of poverty and instability. An eviction is not just the loss of a home but also often brings a significant disruption to commutes to work and school, a legal eviction record, challenges to secure future housing, and an overall sense of instability. But as affordable housing providers, we also recognize that our ability to maintain our properties is fundamentally impacted by the rent revenue we collect. Significant revenue loss, such as that experienced when rent isn’t paid, makes it challenging to successfully operate our communities and even more difficult to provide high-quality resident services.  To achieve housing stability – both for owners and for residents – we must resolve the question of how to support residents to make timely payments to avoid eviction while ensuring adequate revenue to effectively maintain affordable properties.

NHT recognizes housing stability is foundational for our residents’ well-being and contributes to the thriving, sustainable and resilient communities we aim to foster. Given the evidence of racial disparities in eviction rates, we recognize that eviction prevention is also a racial equity issue and that identifying solutions that balance these inherent tensions can pave the way to more equitable access to housing. 

As such, NHT’s approach seeks to balance eviction prevention with the long-term financial health of the property. Our approach is the result of ongoing collaboration between three parties: our resident-serving Community Outreach and Impact (COI) team, our portfolio-wide Asset Management team, and a third-party property management company that is contracted by NHT. When confronted with a lease violation, such as nonpayment, our COI team, Asset Management team, and the third-party property management company work together with each resident individually to come up with a solution and prevent evictions.  Our approach includes the following steps:

• Lead a discussion with the resident. Nonpayment is a signal to NHT that a resident could be experiencing a crisis. Our COI team and/or property managers communicate with the resident to inquire about current financial stressors and connect them to supportive services.
   
• Calculate income-to-rent ratio. During the discussion with the resident, our Asset Management team and property managers confirm resident income and compare it to the cost of rent to determine affordability and household resiliency. In some cases, property rents may be unaffordable to residents. Rents for units funded with Low Income Housing Tax Credits are calculated based on area median income (AMI) as opposed to a resident’s actual income. This is not the case in most HUD-subsidized project-based or tenant-based housing assistance (e.g. Housing Choice Vouchers) where rents are calculated as 30% of a resident’s income.
   
• If rent is affordable, institute a payment plan. If the resident can afford rent but is experiencing a temporary lapse in ability to pay, our Asset Management team and property managers offer payment plans to buffer the resident’s changing economic situation while considering the income needs of the property. In practice, this often looks like residents paying 110% of monthly rent for a specified period of time, where 100% of the payment applies to the current rent period and 10% of the payment is applied to the past due balance. 
   
• If rent is unaffordable, provide a moveout agreement. If the resident cannot reasonably afford the rental price, our Asset Management team and property managers offer moveout agreements to give the resident time to find new housing arrangements. Moveout agreements can last up to six months, during which time the resident pays 30% of their current income towards rent (like in the case of Housing Choice Vouchers). The “rent” collected during the moveout period is ultimately returned to the resident in the form of relocation benefits, if they adhere to the agreed upon timeline. In many cases, the resident is referred to another NHT community that is more affordable to them or is recommended to NHT’s property management company to find a better match across their affordable housing portfolio. Although moveout agreements present a temporary financial setback for NHT, they are ultimately shorter than the extensive, nearly 18-month process of formal evictions through the court system. Though the moveout period can last up to six months, in many cases moveouts happen in two months. 
   
• If a resident presents a threat to community health and safety, engage in legal eviction proceedings. The health and safety of our communities is a top priority for NHT. When residents feel unsafe in their homes due to threats from one resident, the housing stability of the entire community is at risk. A resident who violates the terms of their lease through presenting a threat to others’ well-being is given an official notice to quit and law enforcement gets involved.

We know from experience that eviction prevention practices like supportive payment plans, clear and regular communication, and connections to resources effectively reduce housing instability. We also understand that these practices are rarely explicitly encouraged through the mechanisms that finance low-income housing. For the two million households residing in Low Income Housing Tax Credit (Housing Credit) properties, their access to tenant protections like eviction prevention programs can be shaped by whether such programs are incentivized or required within the Qualified Allocation Plan (QAP) as a condition of funding.  As such, housing finance agencies (HFAs) -- which draft and implement their state’s QAP -- play an important role in advancing solutions that housing providers can use to keep residents stably housed. 

A recent analysis conducted by NHT found that 14 out of 53 HFAs (all 50 states, plus DC, New York City and Chicago) include language on eviction prevention practices in their QAPs.  

Among these 14, the provisions vary widely from state to state. Arizona and Vermont encourage the development of housing retention-focused supportive services plans. New York City requires property managers of Housing Credit-funded properties to implement a “tenant stability plan” that uses payment plans and mediation to address rental arrears and lease violations. Chicago, Michigan, and Virginia all include eviction prevention language only with regards to permanent supportive housing, while New Mexico and New Jersey include similar language only for special needs populations. 

One of the strongest provisions around eviction prevention comes from the Indiana QAP, which since 2020 has included incentives for providers using Housing Credit resources to use an eviction prevention plan. The plan requires QAP applicants to detail strategies they will use to resolve issues with individual residents and must ensure that eviction is used only as a last resort in Housing Credit properties. The plan, its implementation, and related eviction records are subject to HFA compliance monitoring. 

As a housing provider, we understand the challenges that developers face when navigating complex QAP requirements. We also know that it is vital for the communities and residents we serve that we advance solutions that lead to greater housing stability. NHT’s current model for eviction prevention continues to evolve along with the needs of our communities, and we recognize that there is no one-size-fits-all eviction prevention strategy for all Housing Credit properties nationwide. Nevertheless, QAP incentives represent a critical opportunity to prevent evictions by encouraging affordable housing developers to prioritize and budget for robust tenant protections, and by nudging owners to use discretion in responding to lease violations. Such a nuanced approach can minimize evictions while simultaneously ensuring that properties can still sustainably operate in the long term. As NHT continues to strive for balance in our commitments in order to maintain housing stability for our residents and ensure the financial sustainability of our properties, we call on HFAs and affordable housing owners to continue to pilot and share new solutions that will deliver benefits for all.

This NHT Update is part of a recurring series focusing on solutions that promote Housing Stability. Each installment will share insights on potential solutions to four major threats to Housing Stability: reduced housing quality, the sale or conversion of affordable housing, climate change, and a lack of tenant protections.