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Even as the pandemic has started to wind down slightly, reports found that more than 13.5 million, roughly one in five renters, were still not caught up with their rent as early as February 2021. This, and many other rental or property-related issues have been plaguing American households, even as rental prices in 47 states have increased by as much as 5% in the last year

While the property market has shown signs of cooling down, as the Federal Reserve aggressively hikes interest rates to combat soaring inflation, a new challenge is looming on the horizon which has now left millions concerned over their privacy and safety. 

As the rise of technology, software, and the Internet of Things (IoT) filter through every industry, real estate, and property management is no different in this regard. 

The technologies being used by corporate property owners and landlords are raising questions over the amount of data and information of tenants that are being shared or sold to third-party agents or bad actors. 

Seeing as many landlords or owners are now looking to modernise their rental units, utilising the capabilities technology and the internet has to offer, with products such as security monitors, facial recognition, augmented reality facility management, and smart entry systems, among others - tenants want to know how much of their data is being obtained and stored by their landlords. 

The gathering of personal information and data, in regards to property management and rental units, has been a long road of concern for many American households. Seeing as state and local laws regulate what information landlords are allowed to obtain, there’s been a discrepancy in terms of how much available data is being shared or sold to third parties. 

The rental rewards platform and proptech startup Bilt recently came under fire for its almost seemingly endless pit of personal information and data it has on millions of American renters. The startups' software and collaboration with major corporate landlords such as Equity Rental means that they have access to renters' personal information and addresses.

Privacy concerns are nothing new, and for renters, it’s becoming more and more alarming how much of their private records or information is in the hands of their landlords. 

It’s not at all possible to trace and find every server that has some dossier of your personal information. Regardless thereof, both tenants and landlords should consider some of the key real estate privacy risks they could encounter. 

Smart home technology and internet 

As already mentioned, technology and software, with the help of the internet is creating a new breed of homes and apartments across America. 

The rise of smart homes has been a long time coming, but it’s only more recently that landlords have been focused on implementing certain technological features in both old and new buildings to upgrade security and tenant features. 

While these features are making homes and rental properties more attractive for American renters, it now also comes with an increased risk of data and information exposure. 

Smart doorbells, automated thermostats, wifi-connected delivery and security systems, and even smart entry systems may contain some trace of renter data. From fingerprints to facial recognition, information such as this is being captured and stored in various servers unknown to tenants. 

Today, more than ever before it’s become important for landlords and owners to oblige state and local laws regulating the protection of tenant data when utilising IoT systems. States such as California and Oregon have in more recent times moved to implement specific security standards for IoT devices in smart homes. 

Even though these regulations exist within a minority of states, landlords should carefully review the type of security systems and devices they’re looking to use and indicate this to their tenants. Furthermore, landlords should consider vendor protocols and security measures to protect personal data and information in the event of a breach. 

Data Collection 

Applying for a rental could mean that a renter will need to give up a lot of their personal information for review by the landlord. 

Some of the most common information required are: 

While landlords may be obligated to request these personal documents, many times tenants feel unsafe or wary of having to simply offer up their private information to landlords. 

Recent changes in state privacy laws have meant that renters now have rights concerning the personal information they share with landlords, the right to access, correct, and delete or obtain portable copies. Seeing as much of this information is shared via the internet or online platforms, keeping track of all documents shared can be a tremendous challenge. 

To ensure data protection and privacy, landlords are urged to utilise systems and data collecting points that are centralised on a secure database, and keep these files under a digital lock and key. 

Applying for a rental, whether it’s through the internet or in person does come with an administrative burden, and it’s important that both parties, the landlord and tenant remain compliant with state and local laws, and ensure that data collection points are secure at all times. 

Tenant privacy notice 

Tenants will need to be informed by their landlords or building management company about the required personal information that is needed during the application process and throughout the rental period. 

Various state laws and amended regulations have now become more focused on protecting renters’ personal information, and ensuring that landlords communicate any form of the privacy notice. 

Landlords will need to notify tenants on:

For most cases, it’s also important that renters read through privacy notices during the screening period, and ensure they raise any concerns or questions they might have. In states such as California, corporate renters and property management groups will need to disclose the information they obtained from renters, for what purpose, and rights assigned to individuals or renters to exercise their privacy rights. 

It’s not just in California where landlords are now coming under question in regards to the information they collect from their renters. Some states, such as Colorado, Connecticut, Utah, and Virginia, among others, have changed and improved state privacy laws related to personal information. 

New York has also recently made changes to tenant privacy laws and looks to mitigate the sharing of tenants' data and information regardless of the point through which it has been collected. 

The Bottom Line 

Renters run an increased risk of exposure if not aware of the different points at which their personal information and data can be obtained. While smart technologies and systems have upgraded our homes, it’s also increased exposure to personal information. 

Landlords will need to take caution when implementing certain management systems to ensure they comply with state and local regulations. Above that, it’s advised they exercise due diligence when working with digital platforms and technologies to collect and store applicant information. 

Regardless of the position held, whether a tenant or a landlord, there are particulars required by each party to ensure a partisan agreement. More so, it’s important for tenants to have a clear understanding of their rights, and how they can be used to protect their personal information. 

Operating a property rental business during a pandemic and economic downturn double whammy is one of the worst scenarios business owners can be in. There is uncertainty as to the collection of rent from tenants. It is also possible for many tenants to leave, as they can no longer afford to pay the rent unless they get a government subsidy, which will only be there for a limited period.

So what can businesses do to make the most out of the dire situation? Can businesses involved in the rental of apartments, residences, or other real estate properties survive the difficulties brought about by a major disturbance in the economy?

The good news is that there are ways to stretch resources and profitability while mitigating risks and adverse outcomes in the rental market. Here’s a rundown of what businesses can do to avoid suffering massive losses or completely going bankrupt.

Enforce a renters insurance requirement

Unless there are specific local laws that prevent a business from doing it, it is legal for apartment or rental home owners to require new tenants to obtain renters insurance. This insurance provides most of the benefits of a homeowner’s insurance except for dwelling and structure coverage.

This insurance mostly protects the tenants, but it also indirectly affords some degree of protection for the property owner. With renters insurance, landowners can be sure that they will be obliged to worry about the welfare of tenants in case an accident happens. Even in the case of man-made incidents like fires started by the tenant’s children, the insurance can pay for the possible damage.

Unless there are specific local laws that prevent a business from doing it, it is legal for apartment or rental home owners to require new tenants to obtain renters insurance.

Apartment owners can go after tenants for damages they cause to a property, but it would be better to have renters insurance cover for everything. In the economic situation the world is facing now, there is a high likelihood that tenants will be unable to pay for damages. Many are even having a hard time paying their rent. It is advisable to learn all you can about renters insurance coverage.

Get business property insurance

As a rule of thumb, every business should sign up for business property insurance. This is an insurance plan intended to compensate for the damage to or loss of properties used in the operation of a business.

Business property insurance can provide the cash necessary for a business to resume operations as soon as possible. Not all property insurance plans provide the same coverage, so it is crucial to carefully look at the terms and conditions. Most policies only cover a certain percentage of the insured property’s market value.

Also, there are specific cases that are not covered. Negligence or the violation of building codes, for example, can be used as grounds by insurers to avoid providing compensation. Regular property wear and tear are also not covered by this kind of insurance.

Moreover, some insurance companies only provide certain coverages if the insurance holder pays for add-ons. Businesses should be mindful of this, as it is quite common and largely acceptable for insurance companies to run ads that may be misinterpreted by consumers.

Make use of the LLC protection

Many apartment and rental property owners operate their business as sole proprietors or individual business owners. This can be disadvantageous in the face of major problems. That’s why some legal experts advise rental property owners to make their businesses LLCs or limited liability corporations.

LLCs protect business owners from liabilities that may arise from the operation of a business. An LLC company, an artificial entity, becomes the sole party answerable to liabilities that may be incurred in the course of business activity. As such, only the assets of the LLC are exhausted to pay for liabilities or claims for damages. The individual business owners will not be legally compelled to cover all liabilities.

LLCs protect business owners from liabilities that may arise from the operation of a business.

Additionally, it is possible to take advantage of pass-through taxation. According to Legal Nature, this means that the LLC does not pay the taxes. Instead, taxes become the responsibility of the business owner. This gets rid of the double taxation instances for single-member LLCs, wherein the business is taxed as if it were a sole proprietorship.

However, there are some intricacies involved in going with the LLC option. It is advisable to consult a corporate law specialist to be acquainted with the pros and cons as well as the process and requirements.

Be in close communication with tenants

Treat tenants well to avoid losing them. When the economic tumbles, it is only logical for many to look for ways to reduce their expenses. Many will likely move to smaller apartments to save on their recurring expenses.

Avoid losing good-paying tenants by communicating with them to address problems they may have with the property. It is also not a bad business decision to strike short-term compromises to help them get through the economic hurdles. It can be a temporary reduction in the rent amount or the limited deferral of payments.

It would be better to keep tenants with good track records than to find new ones, who will likely end up defaulting on their obligations because of the prevailing economic situation. Besides, it will be very difficult to find new tenants when there is a recession or some other similar condition.

Seek government assistance

There are many government programs designed to help small businesses survive during an economic crunch. These include the Economic Injury Disaster Loan (EIDL), Paycheck Protection Program (PPP), and other programs administered by the Small Business Association (SBA). These can provide valuable support to businesses while the economy is still in bad shape.

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There is a reason why people and businesses pay taxes. The government is expected to provide assistance when times get rough. However, do not expect the government to cover everything. It would be wise to exert all the effort to avail of government aid programs, but it is preferable to plan things as if no aid is expected.

The still ongoing COVID-19 pandemic should have taught businesses that nothing is predictable and consistent. Serious tumultuous situations can happen without any warning, so it is a must to be ready and to have contingency plans for various possible challenges.

Sezer Sherif, Founder and CEO of investment group Vector Capital, explores the strengths of alternative property investment in the UK.

There is no question that COVID-19 has completely torn through the UK economy, with signs of initial recovery towards the end of 2020 largely dashed as the country continues to navigate through a third round of lockdown restrictions.

Yet, one sector that has continued to fair well despite initial and ongoing restrictions is the residential property market, with data from HM Revenue and Customs confirming an estimated 129,400 house sales in December 2020 – which was nearly a third (31.5%) higher than December 2019 and 13.1% higher than in November 2020.

However, according to a recent study by Citizen’s Advice, the same positive stats cannot be reported for the rental or buy-to-let sector, which found that almost a third of renters across the UK had lost income during the pandemic and 11% were in rent arrears. Furthermore, the number of private renters behind on their rent has also doubled over the last 12 months.

In addition to the challenge of rent arrears, landlords haven’t been able to generate viable yields on buy-to-let for a long time, with evolving landlord taxes resulting in an average annual return of 3.53% for the UK market; a figure even considered to be ‘over-performing’.

When compared to the projected returns and no hassle promise of property bonds, it is clear to see why hundreds of thousands of landlords are now selling up and reinvesting funds into the alternative market, with COVID-19 standing as the final catalyst for making this change.

Asset-Backed Investment, No Hassle

In brief, alternative property investment enables high net worth or sophisticated investors to invest funds into the construction of large-scale property developments, without the hassle of actually owning or managing it.

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By essentially ‘lending’ funds under a legally binding agreement, which usually comes with a fixed rate of return, investors don’t have to worry about managing tenants, finance or maintenance issues and instead reap a financial reward of between 6 – 10% for helping to fund the build – a somewhat significant increase when compared to buy-to-let.

Savvy Investors Diversify 

The COVID-19 pandemic has completely obliterated many investment channels in addition to buy-to-let, with the stock market having also taken a serious hit – something repeated when details of the new COVID-19 variants came to light.

However, the savvy investor has been circumventing volatile markets for years, particularly following the Brexit referendum several years ago together with political uncertainties overseas.

Although COVID-19 has taken investment challenges to a new level, it is these periods of uncertainty that force investors to think differently and to diversify their portfolio and investment decisions in order to make viable returns.

The alternative property investment market is one such route, and with construction not impacted by secondary lockdown restrictions, both developments and resulting returns are more likely to remain on track.

As it stands, there is no definitive end to the current COVID-19 pandemic. However, the initial pangs of panic have disappeared and there is definitely a stronger resolve amongst business leaders, developers and investors to fight back, disrupt and diversify, where one great place to start is with the alternative property market.

Private rents in some of the UK’s largest city centres have fallen drastically in the wake of a post-pandemic exodus from major urban areas, according to new data from online estate agent Rightmove.

Rightmove’s latest rental trends report, released on Wednesday, showed that inner-city rents dropped by as much as 12% in Q4 2020 as tenants fled to the suburbs. Inner London was the hardest hit, with annual asking rents falling by 12.4% on average in the three months to 31 December.

Edinburgh city centre and Manchester city centre followed close behind London, their average rents falling by 10% and 5.3% respectively.

Further, all ten of the UK’s biggest city centres saw an uptick in the number of inner-city residents enquiring about properties outside their area. 53% of renters in Inner London asked about properties outside the city centre during Q4, up from 45% in 2019, while central Edinburgh’s proportion rose to 37% from 29%.

As a result of this migration, there has been a significant increase in properties available for rent in city centres. Vacant properties available in Leeds, Inner London and Nottingham have more than doubled.

“There's no doubt that higher rents will return once life goes back to some form of normality,” said Tim Bannister, Rightmove’s Director of Property Data, “but it will be the city centre properties with gardens and balconies that will be able to command the biggest premiums."

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Marc von Grundherr, Director of Benham and Reeves in London, said that the pandemic had reduced tenants’ willingness to commit to the high cost of renting in central London and other urban areas.

“At present, the vast majority of the capital remains closed for business,” he noted. “As a result, demand has fallen dramatically causing rental stock to flood the market. This excess level of stock means that landlords are being forced to accept dramatically lower levels of rent just to avoid lengthy void periods between tenancies.”

Many business owners who rent a commercial space are struggling or refusing to pay the rent. If this describes your tenants, you may be wondering if you can sue the insurance company to cover your costs.

So far, the pandemic has lasted for over a year, and there’s no end in sight. Eating a loss for months on end is not sustainable. After all, you may be depending on rent to pay your own mortgages. Read on to learn how some property owners are trying to get repaid for lost income due to the pandemic.

The Pandemic Is Disrupting Business and Rents

Many states are ordering shutdowns of businesses that have been deemed non-essential. Most businesses can not afford to go weeks without income. This is making companies try to back out of their rent. Some are claiming the virus as an act of God, which allows them to back out of the contract. Others are suing their commercial insurance provider.

Insurance companies are also denying coverage in many cases. They are saying the situation with the pandemic is out of their control. Others are saying that the damages are not physical. The way insurance companies make money is by avoiding large payouts. It is natural they are going to fight in court to avoid being sued by everyone.

Business owners and landlords feel their business insurance should cover their losses. Some have business interruption clauses in their contracts that should cover this. Insurance companies counter that the damages for COVID-19 are not their fault. They also claim the damages are too hard to calculate. This has resulted in a growing number of legal battles.

So Far No Landlord Has Won In Court

At this time, no landlord is known to have won a business interruption case that is related to the pandemic. Some legal advisors are recommending that business owners sue the tenant. Others are saying to work out a settlement or other arrangement. With so many small businesses closing due to the pandemic, you’ll have to consider the fact that it may not be so easy to get new tenants.

At this time, no landlord is known to have won a business interruption case that is related to the pandemic.

Thousands Of Cases Have Gone to Court

The failure or success of many lawsuits will depend on the states they are filed in. A court in Texas may rule differently than a court in New York. Experts say there are already lawsuits worth billions in courts.

These cases are being fought in state and federal courts. Some are claiming bad faith upon the insurer. Others have more creative legal strategies. There are promising cases in states like:

Some Cases Are Winning

There have been thousands of cases filed since the pandemic began. Insurers are playing hardball and seeking dismissals. Most of the cases are being dismissed by judges.

A few cases brought against insurers seem to be winning in court, though they haven’t officially been settled at this time. Some plaintiffs may have found a strategy that is working in court. Only time will tell.

Lawyers Are Arguing That the Policies Are Too Vague

The insurance companies are claiming their policies never stated they include viruses. Some insurance contracts have provisions called "all-risks" policies. Some businesses in Western Missouri made it to a jury trial. The judge ruled the physical presence of the virus met the requirements for physical loss and damage.

The key in these cases is to point out how ambiguous the language in the contracts are. Another strong strategy is citing the government orders as the damage. These are more tangible in a court's eyes than a virus.

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Some States Have More Open Interpretations of Physical Damage

A judge in New Jersey ruled that New Jersey state law didn't need physical damages. Plaintiffs cited an earlier case where dangerous gas made a packaging plant unsafe. They also cited a case where a downed power grid interrupted a grocery store.

Closure orders by the governor also helped them get a favorable ruling. Dangerous conditions that interrupted operations were enough to satisfy the court. There was a similar ruling in a North Carolina case. It ruled that being unable to physically access the property was a physical loss. This will be another way landlords and other businesses will likely take.

Closing Thoughts

This is a newer battlefield in litigation. Business interruption insurance is one of the main ways to sue insurance companies. Others may cite bad faith by the insurer.

Some cases are being won against insurers by other business types. Landlords should cite these as precedents, and read through as much information about legal options for businesses affected by COVID-19 as possible. The key to winning these cases seems to be citing ambiguous contracts, state law, and government mandates. These are the main ways cases have made progress in court.

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