Tens of thousands of Americans will participate in a rent strike today, demanding that the government grant them relief from paying rent because of the coronavirus pandemic.
With 30 million Americans out of work, millions simply can’t afford to pay their monthly rent bill. Some cities and states have banned evictions but many have not. This means that millions of people are at risk of losing their housing because they are being prevented from working.
It’s not just tenants who are at risk. With so many unable to pay the rent, building owners and landlords can’t pay the mortgage on their properties.
There is going to be a massive bailout. How it’s structured and who gets what is still to be determined.
More than 30 states have moratoriums on evictions due to the outbreak, but some are set to expire next month, while other states have no such mandate, leaving evictions to courts and local governments.
But some are calling the strike reckless, due to the potential ripple effects it could have on the housing market if the strike is large enough.
It’s a risky thing to deliberately not pay rent. And property owners are worried that the risk will fall on them.
“These people don’t think through who they’re hurting, and they’re disrupting the entire financial ecosystem in doing this,” Doub Bibby, president of the National Multifamily Housing Council (NMHC), told NBC News.
“They think they’re hurting the big, bad landlord, and what they’re really hurting are all kinds of people like themselves, and they are spreading the economic malaise more broadly in the economy,” Bibby added. He said there should instead be a push to press local and federal lawmakers to intervene.
An epidemic of defaults by landlords would devastate local housing. To prevent that, it’s a certainty that help is on the way.
This is a local problem and should be handled at the local level. Congress might give general housing assistance to cities and towns, but local politicians are going to have to find their own solutions. Wherever possible, landlords and renters should work out their own solutions.
There are no national answers to this crisis. Congress could mandate rent relief for tenants in housing built with federally-backed mortgages, but the fallout from the crisis is larger than you might think. Who pays back the missed rent payments? What happens to the industry after the crisis has passed?
Moreover, tenants unable to pay back rent will face the threat of damaged credit scores. Landlords usually refer unpaid rent to debt collectors, who send them to credit reporting agencies. This landlord collection account on a credit report is a negative entry that can remain for up to seven years and significantly lower credit scores. This hurts the ability of many tenants to secure new housing and reduces their access to affordable credit and future loans. In such circumstances, these consumers are often forced to turn to predatory lenders and landlords charging above market rates for low quality housing, keeping them trapped in a spiral of debt.
Congress should address this by expanding its moratorium of 120 days on evictions from properties with federal financing or assistance to cover all renter households, and prohibit landlords from evicting tenants because of rent arrears accumulated during the crisis. Congress should not leave struggling tenants to pay back rent on their own. It should instead fund rental assistance both to reimburse landlords for unpaid rent and to help the tenants who remain in financial distress after the pandemic.
The government is trying to stave off a total collapse of the economy. They are trying to make sure that the basic needs of the people — food and shelter — are being met during a period where millions literally cannot afford either.
What the country looks like when the crisis has passed is another story.