Congress must pass an emergency rental assistance program for those impacted by COVID-19
As a result of the COVID-19 pandemic, renters and housing providers alike are struggling to meet their financial obligations. On Sept. 1, the Centers for Disease Control (CDC) announced a national eviction moratorium for virtually all tenants in the U.S. impacted by the COVID-19 pandemic, in effect through Dec. 31, 2020. While the CDC stepped into this housing policy in order to avert an even larger health crisis, the short-sighted and one-sided nature of an eviction moratorium will ultimately harm the very people it aims to help. We need additional, more sustainable support from our government.
Prior to the pandemic, many renters were already struggling to make ends meet. In 2017, nearly half of all U.S. renters, or 20.8 million people, spent more than 30 percent of their income to cover housing costs, and a quarter of all renters, or 11 million people, spent more than half of their income on housing. Renters tend to be less financially stable than homeowners, often having less wealth, lower incomes, and more income volatility. As a result of this, they are generally less prepared to deal with a sudden emergency or income loss like the millions of Americans are facing now.
The eviction moratorium alone does nothing to address the short- and long-term financial needs of renters, as they will still be required to pay back rent and accumulated fees at a later date. Emergency rental assistance and additional unemployment assistance, on the other hand, empowers Americans in dire need to pay rent and other necessary expenses, avoid accumulating debt, and ultimately putting money back into the local communities through property taxes, utilities and maintenance jobs.
While COVID-19’s negative impact on the livelihood of renters is well documented, landlords and property owners face an equally dramatic loss of income, which leaves them unable to pay mortgages, maintain buildings, meet property tax obligations, and the demands for increased health and safety measures. The inability to pay rent also has an upstream impact on lenders as cash flows from property owners slow, property values fall, further stressing financial institution balance sheets.
The moratorium, without additional protections for owners, will particularly impact small “mom and pop” owners. According to the Urban Institute, more than half of rental units in the United States are owned by landlords with 10 or fewer total units, and one third of landlords earn less than $75,000 annually. Their recent survey with Avail found that 35 percent of respondents reported drawing from savings accounts or emergency funds to cover expenses related to COVID.
Small building owners are small business owners, and they are operating within slim margins, and relieving renters of their obligation to pay without mortgage forbearance protections, as well as protections from other property-level financial obligations like property taxes, insurance payments, and utility service, the stability of the entire housing market is at risk. An eviction moratorium alone only shifts the devastation of loss of income from one vulnerable population to another.
Eviction moratoriums and mortgage forbearance periods provide short-term relief, but without direct financial assistance to cover lost payments, these protections are merely delaying evictions and another housing market crisis. Put simply, letting the rent go unpaid is not a realistic solution for tenants, landlords or the health of the economy.
In March, the CARES Act included a number of key funding provisions for individuals and businesses. However, none of these funds were tied to housing obligations and will not be sufficient to address the financial challenges that both renters and the rental industry are now facing. More direct emergency rental assistance is necessary — particularly for those who do not presently receive federal housing assistance through the U.S. Department of Housing and Urban Development.
Congress must act now and pass an emergency rental assistance program for those who are impacted by the COVID-19 crisis and struggle to cover housing expenses, similar to the $100 billion that was included in legislation recently passed by the House H.R. 6800, The Heroes Act. Emergency rental assistance would prevent a public health crisis from becoming a long-term housing — and financial — crisis.
Rafael E. Cestero is the President & CEO of The Community Preservation Corporation, a nonprofit multifamily housing finance company, and the former commissioner of the New York City Department of Housing Preservation and Development.