Diane Yensen of Northland Investment Corp. was watching a commercial for the "Hyundai Assurance" program — which allows drivers to walk away from a loan or lease in the event of certain "life-altering circumstances" — when she said it hit her: "I thought, 'That would be really great for renters.'"
Massachusetts-based Northland followed suit by launching its Rent Assurance Program, which enables renters to walk away from a lease without being responsible for rent payments for the remaining term of the lease or other fees, if they lose their income involuntarily.
"If you live in a crappy apartment and want to get a better place, you can do it and not worry about losing your job and having to get out of a lease," said Yensen, head of Northland's apartment division.
Northland's program is the latest sign that the apartment rental market has turned more competitive in the recession, with landlords chasing after tenants with incentives.
Northland's three Connecticut apartment complexes include Hartford 21 in downtown Hartford, Bigelow Commons in Enfield and the Pavilions in Manchester, totaling about 1,700 rental units in the state. The real estate company operates almost 17,000 rental units across the country, 91 percent of which are occupied, Yensen said.
"If they were really at 91 percent they wouldn't be offering this program," said Fran DeMaio, owner of Connecticut Apartment Locators, which represents tenants and landlords in the Hartford and New Haven areas.
DeMaio said the circumstances surrounding a job loss could be tough to verify, and tenants could potentially misrepresent being out of work when they aren't.
Connecticut rental occupancy rates are hovering between 92 and 93 percent, said New Haven-based Victor Nolletti, senior director of the national apartment group for the investment services firm Marcus & Millichap. That's down from 94 to 95 percent at this time last year. Nolletti noted that New York-based Morgan Management offers a rental assurance program with a slightly different twist: If a renter loses his or her job, rent will be immediately reduced by 20 percent, for up to three months.
"It's a function of the economic times," he said. "We'll start to see more of this in other areas. The only guys that won't fall in line will be Amex and Visa."
Under Connecticut law, landlords cannot charge set termination fees that apartment owners in other states can, but renters in Connecticut can be held responsible for paying the remainder of a lease, which can mean many months' rent. Northland's rents in Connecticut range from $750 to $3,500 a month. Northland's tenants typically sign a one-year lease.
Renters in Northland's properties across the country have already registered for the program, but as of now, no one has yet to actually take advantage of the program. New renters and renters renewing leases are eligible.
Yensen acknowledges the buzzkill of simultaneously losing one's job, apartment and car, but believes the program is ultimately good for the economy and for individuals.
"It helps us and it helps them," she said. "Honestly, I think its going to raise our occupancy rates, not lower them."
Reprinted with permission of the Hartford Courant.
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