The coronavirus pandemic has been a trying time for millions of people across the world, with the majority of socio-economic problems worsening as an indirect result of the pandemic. The real estate industry has fallen apart with the rising spread of Covid-19, specifically for renters and landlords. In April 2020, nearly one-third of the U.S. population was not able to pay their rent, and as a result, landlords began to evict tenants. With unemployment rates spiking in April as a result of businesses having to lay off employees, people did not have a steady income by which they would pay their rent, especially considering that a 2018 report by the Joint Center for Housing Studies of Harvard University (JCHS) found that 25% of all renters spent half of their income on rent (Smith).
What The Government Has Done So Far
In response to this, the federal government passed the CARES act and enacted an eviction moratorium, meaning that all evictions have been halted until December 31, 2020, however these measures in and of themselves do not address other important points of the housing industry. To begin with, the CARES act only covers federally-backed mortgage loans and federally subsidized properties, meaning that the majority of renters are not covered under the CARES act. In addition, nowhere do these two executive orders address the issue of rent cash flow not going to landlords, meaning it makes it difficult for them to pay property taxes and utilities. What about cancelling rent? It’s not that simple. When a tenant pays a landlord their monthly rent, the landlord uses most of that money to pay for federal and state property taxes along with utilities to help maintain the property. With the rental cash income not coming in, many individual landlords are having trouble with paying the costs out-of-pocket, along with no federal assistance for landlords themselves. As Mary Cunningham, vice president for Metropolitan Housing and Communities Policy at the Urban Institute, stated “To prevent ripple effects, we should just help renters pay rent”, which is what the local, state and federal government should aim to do.
What is Being Proposed in Congress
As a result, there have been many propositions within Congress regarding the rising concerns of the housing crisis. Representative Ilhan Omar (D-MN) introduced a policy that would effectively “cancel rent”, in which she calls for rent/mortgage payments to be cancelled for up to a year for all renters and mortgage holders with an existing rental or loan agreement on their primary residence along with a clause that there would be no income/payment level restrictions in regards to who would be eligible. In addition, the government would provide a federally funded relief fund for landlords and mortgage lien holders to cover losses from the cancelled payments. Given the catastrophic repercussions of cancelling rent, it has been difficult to ramp up support for Rep. Omar’s proposal and instead, focus has been on approving the Rental Property Relief Fund to be established by the Department of Housing and Urban Development (HUD). In this program, it would allow for landlords to apply to have the full cost of any cancelled rent payments covered by the federal government, however this has been difficult to fund. Expanding existing programs such as the federal Housing Choice Voucher Programs has also been talked about, in which the government would subsidize portions of rent payments, and has already been effectively used in other times of economic distress. The Senate has introduced its own proposal that pairs with a separate bill in the house, through which they would provide $100 billion to low-income renter households to provide housing relief. The rent payments would be made directly to property owners via the HUD, state and local governments on the behalf of renters.
Staying Informed
It is important to stay informed regarding the specific rules and regulations within individual states, along with knowing the rights of renters and landlords in regards to evictions and paying rent. State and local websites would have the most up-to-date information along with district courts for those areas, and privacyrights.org is excellent with explaining all of the rights that renters have in the case of eviction along with the responsibilities and support for landlords.
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Written by Shreya Bhardwaj
Date Published: 11/1/2020
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Sources:
Badger, Emily. “Why an Eviction Ban Alone Won't Prevent a Housing Crisis.” The New York Times, The New York Times, 3 Sept. 2020, www.nytimes.com/2020/09/03/upshot/eviction-moratarium-rent-crisis.html.
Smith, Kelly Anne. “Renters In Crisis: Housing Experts Say Canceling Rent Isn't The Best Answer.” Forbes, Forbes Magazine, 26 May 2020, www.forbes.com/sites/advisor/2020/04/23/renters-in-crisis-housing-experts-say-canceling-rent-isnt-the-best-answer/?sh=4527849cbd23.
Kaysen, Ronda. “How Can Landlords Get Relief If Their Tenants Can't Pay?” The New York Times, The New York Times, 18 Apr. 2020, www.nytimes.com/2020/04/18/realestate/how-can-landlords-get-relief-if-their-tenants-cant-pay-rent-because-of-coronavirus.html.
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What a well-written article! Keep up the good work! :)