Even before the pandemic, many Americans struggled to afford rent, collectively paying landlords billions in late fees each year. On average, 3.6 million eviction cases are filed each year, and 1.5 million Americans end up being evicted.
A startup called Till is tackling one part of the problem: Since tenants often don’t have enough money at the beginning of the month when rent is due, the company creates a custom payment schedule that lets someone pay as money comes in.
“Many renters pay 35-50% of their net income on rent, and have limited cash savings—usually less than a month’s rent in savings,” says David Sullivan, founder and CEO of Till. “So if a hiccup occurs, rent gets challenged. They have highly volatile incomes. Many renters are hourly workers, and work gig economy jobs as a side hustle. They’re putting things together to make ends meet . . . And when you look at the landlord ecosystem, landlords have inflexibly structured everything.” For most tenants, rent is due on the first of the month. Late fees happen around the fifth of the month, and evictions are filed on the 15th.
The startup works primarily with institutional landlords with thousands of units. Tenants who choose to use the service pay a small fee, starting at $8 a month; for those who often pay late, it’s far less than typical late fees, and a way to catch up. When landlords agree to work with the service, they also agree to waive late fees and defer eviction filings. “Late fees are very similar to payday loans,” Sullivan says. “Most late fees are high-cost, like 100-200% APR, that basically afford the renter two weeks or 10 days before an eviction cycle begins. So when a renter faces a financial challenge, they aren’t really afforded any opportunity to get back on track.”
The startup’s app builds a personalized payment schedule with smaller payments throughout the month, in line with when the resident is getting paid. For landlords, it’s a way both to help someone stay in their homes and a better business decision than evictions, which collectively cost landlords billions each year. If someone is behind in multiple months of rent, it’s still possible to create a payment program.
“We do it in a way that doesn’t stress them financially, which is the trick,” he says. “If a landlord comes to you and says, ‘You owe me $5,000. You’re being evicted,’ and you don’t have $5,000, you’re not going to give them any money. We come to the renter and say, ‘Hey, we know you’re delinquent, do you want to stay in this home? Okay—let’s work on a payment plan that you can afford.'”
It doesn’t address the fundamental problems in the housing system in the U.S.—the shortage of affordable housing and the prevalence of low wages, compounded by other financial challenges like the cost of health care. It also only works if a tenant has some income coming in, though the startup may later work on a solution for tenants who have lost jobs. But the simple step of making payments flexible has helped. Thousands of people have used the service so far, and most who sign up are already behind in payments and facing an eviction risk. Of those that sign up who had been delinquent in payments, 98.5% now pay on time through Till’s schedules.
“We’ve helped thousands of families stay in their homes through this pandemic,” Sullivan says. “And it’s not just about staying in the home—the reality is when you stabilize finances around housing, you help people stabilize their finances for the rest of their life. We’ve had people say, Because of flexible rent, I’ve now been able to buy my kids food for the first two weeks of the month. Or I’ve now been able to better pay down my student loans. The reality is, a lot of people structure collections at the beginning of a month. And so if rent is hitting, and student loans are hitting, and your utilities are hitting, something is going to start being late. And if you unlock a piece of that—rent, the biggest expense—then it actually affords the consumer to better pay across their financial life.”