During the Pandemic, Renters Have Been Protected. Small Landlords, Put at Risk

Over the last six months, the COVID-19 outbreak and pandemic have had untold ramifications for American society. The most obvious of which being the tragic death tolls exacted on the population, the restructuring of our social order, and the constant threat of a new flare in cases and the repercussions that come with it. But moving forward, the economic destruction levied on many industries and constant financial strain being placed on many vulnerable individuals cannot be ignored. Much concern has rightfully been placed on the objective of keeping renters in their homes, but little concern has been placed on the people who own the homes they live in. Moratoriums on evictions have sprung up across the country during the pandemic, protecting most who claim financial distress. But while tenants are protected, landlords are stuck with mortgages and taxes, given no recourse against non-payment, and risking their financial futures with little government assistance.

The greatest threat of the unfolding housing and rent crisis playing out in parts of the country will disproportionately impact small landlords who are faced with no rent, no assistance, and exorbitant property taxes and regulations in many cities. The current crisis in New York City is a microcosm of the threat facing private landlords. As noted in an article by The New York Daily News, “By one estimate, small landlords owning up to five properties account for 28% of the city’s housing stock…” And according to The Rent Stabilization Association, “…70% of its landlord members own just one or two buildings and account for two-thirds of the city’s rent-regulated units.” Massive job loss and stimulus assistance running dry has put a black cloud over the prospects of many tenants across the country, and therefore the prospects of the individuals they are renting from.

According to Forbes, “On a forward-looking basis, just 26% of renter households earning less than $25,000 per year had a high degree of confidence in making their next rent payment when surveyed in mid-July.” As of July 16^th, according to Forbes, only 33 percent of households making between $35-$49,000 had a high degree of confidence that they would make their next rent payment. Local economic policies taken on by many cities and states throughout the pandemic have left many landlords paying property taxes and mortgages, but unable to collect from their tenants or evict them. The result? Many in these communities have been living rent free, with little recourse for landlords even if they can prove delinquency is not a direct result from the pandemic.

The story of Marie Baptiste in Massachusetts illustrates the undue burden that has been placed on landlords, especially small ones, due to local government. According to The New York Daily News, “A registered nurse, Marie has been unemployed since June due to an injury. Marie needs to live on that rental income, but she hasn’t received a dime since October 2019.” While Marie’s tenants have been delinquent in paying her since well before the pandemic, the government of Massachusetts has effectively sided with the squatters and against the property owner. In fact, according to the Daily News article, the Massachusetts State “legislature is poised to create a new moratorium that will extend for a full year after the governor lifts the state of emergency.” Despite both of her tenants working full time, Marie currently has no recourse to remedy what amounts to the theft of her property. If renters are shielded from consequence when claiming hardship, whether they have the money or not, how are affected landlords going to meet the demands of owning their property?

In New Jersey, small landlords stuck without any rental income will simply have to empty their own bank accounts or risk insurmountable debt, while others are living for free in their property. In the state of New Jersey, an executive order from Governor Phil Murphy has banned any evictions or foreclosures during the Covid-19 public health crisis. In an article by NJ Spotlight, Nicholas Kikis, vice president of legislative and regulatory affairs for the New Jersey Apartment Association, estimates that rental income has declined in the state by about 15% already. A controversial new bill being supported in the state legislature would likely cause that number to swell.

The bill, referred to as “The People’s Bill,” would legalize the forbearance of rental payments to qualifying tenants claiming financial distress and would require landlords to offer up to 6 months to repay each missed payment. All missed payments would be payable within 30 months. The bill offers homeowners forbearance on their mortgages, with payments due within 180 days at the end of the crisis. So, what is a New Jersey landlord like Jerry Cheslow to do while he endures non-payment for 30 months and must have any of his missed mortgage payments back to the bank within 180 days? Risk his entire financial future. “Already, I am very hard-pressed by the moratorium that exists today,” Cheslow said, referring to the executive order. “It’s making my financial future unravel.”

State governments are legislating on behalf of tenants without much foresight to the consequences on property owners and the Federal Government is not doing anything at all. The passage of the PPP stimulus program in Congress provided essential financial relief to individuals who lost their jobs. I many cases it provided them more income than they were previously making. But now that well has run dry and Congress is failing the people. For his part, President Trump has attempted to intervene and provided much needed relief to renters and landlords alike in August. According to The Washington Examiner, “HUD Secretary Ben Carson is expected to announce new policies in line with the executive order that will “prioritize federal funds” to provide financial assistance to struggling homeowners.” In June, The Trump Administration also “provided all federally backed mortgages, or 3 out of 4 home loans in the United States, the opportunity to pause or lower their mortgage payments temporarily, known as forbearance.” This forbearance option would run through 2021.

What the Trump Administration has been able to provide homeowners to protect their assets is helpful, but the remedy to this impending crisis is income. State governments are not only placing financial burden on property owners, they are placing great stress on their local economies through incredibly stifling lockdown orders which have put great strain on small business in the country. If State governments continue to pursue never ending lockdowns and restrictions on their economies, businesses will continue to close, more jobs will be lost, and incomes will continue to dry up. In the meantime, Congress is playing politics with providing aid solely at the expense of tenants and landlords alike. It appears that government is comfortable letting private citizens go without payment for months, if not years, and the trickle-down economic effects could be devastating to the entire country.

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