Nearly 16.5 million renter households have at least one worker in an industry likely to be immediately affected by efforts to flatten the curve in the COVID-19 pandemic, according to research from the Terner Center for Housing Innovation [1], UC Berkeley, and according to researchers, the best solution to keep these renters in their home is federally-supported emergency rental assistance.
According to Terner Center researchers, despite significant attempts by policymakers at all levels of government to address the COVID-19 pandemic and its economic consequences, expanded unemployment insurance through the federal CARES Act will be helpful to a degree, but will not be sufficient to address the rental assistance needed by many of the hardest-hit households.
"Other local initiatives, such as eviction moratoria may be helpful in the short-term but do not address a tenant’s accrued rent due at the expiration of such moratoria," stated Ben Metcalf, Managing Director, and David Garcia, Policy Director, Terner Center for Housing Innovation. "Ideas such as 'rent forgiveness' ignore the debt service, payroll, and maintenance obligations of property owners, the majority of whom are small business owners. Simply forgiving rent for an extended period of time could also negatively impact pension funds—a substantial investor in multifamily housing—and chill future investment in new housing. As these types of existing short-term interventions expire this summer, a looming renter crisis awaits. In advance of that, Congress must take swift and decisive action."
In addition to proposing direct assistance for renters, prioritizing the most vulnerable renters, the researchers propose allowing landlords to apply for vouchers on behalf of their tenants. Lenders could immediately offer loans to property owners that reflect rent roll losses incurred over a twelve to twenty-four month period. Loans would be required to be repaid in full and would be structured as subordinate deferred payment liens payable only at the time of future refinance or sale. In return for this assistance, property owners would be required to not move forward eviction proceedings during the term of the loan and concurrently waive any back-rent due from economically-impacted tenants.
"This approach keeps tenants in place until a robust rental assistance program can be deployed," the researchers state.