Protecting Property Owner’s Rights & Minimizing Homelessness Doesn't Need to be a Binary Choice
Hello friends,
On March 16th, 2020 Governor Cuomo announced a statewide 90 day suspension of residential and commercial eviction proceedings in response to the then just emerging COVID-19 pandemic. Several extensions later this order was eventually superseded on a national level by The Centers for Disease Control and Prevention (CDC) via a directive from President Trump under Section 361 of the Public Health Service Act. Designed to prevent further spread of the virus that would inevitably occur should shelters be overwhelmed, this mandate was originally set to expire December 30th of last year. Instead, today marks day 529 of the moratorium for New York landlords. For some tenants this safety net has come at a much needed time, especially those unable to find work or forced to stay home with children due to lack of available child care. Housing providers however are left to bear the brunt, with rental payments drying up while expenses have remained or increased. Seemingly all other industries have received support. Why are property owners left to fend for themselves? Landlords aren't seeking sympathy, just fair treatment.
All Alone
Within weeks of the pandemic starting Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), of which The Paycheck Protection Program was a major part. Initially $340 billion was allocated for businesses to fund payroll, this was instantly absorbed requiring an additional $320 billion a few days later. While almost all industries were eligible to apply for the program one of the few groups left out were landlords. This is because revenue derived from rental properties is classified as "passive" income, whereas those with a W2 job fall into the "active" income bucket, For those in the former group since there is no paycheck needing “protection” they do not qualify.
What The Future Holds
According to the Aspen Institute 15 million people within the United States live in households that owe a combined $20 billion in past due rent. Banks were offering borrowers forbearances last Spring, however those days are coming to an end. Landlords are now faced with a reality of mortgage payments, property insurance, municipal taxes and maintenance costs all coming due with little or in some cases no income to offset the expenses. Should this result in a wave of foreclosures the pain would not end with just the owners involved. Distressed (auction/short sale) prices have a negative effect on all real estate in proximity. Lower property values hurt assessment rolls, resulting in lower funding for local governments and school districts. This is a problem that needs everyone's attention.
Remedies
Fast Track Relief Process: Our government's greatest skill is the ability to get checks into the hands of citizens quickly and accurately. The current application process for rent relief in NY is arduous and requires heavy lifting by both tenant and landlord. Because applications can only be submitted online it unevenly hurts lower income folks who lack access to technology. As of July only a 11% of aid designated for relief has reached landlords and tenants. Give power to local Social Service departments to accept applications in person. A lease agreement and signed affidavit from landlords indicating the amount due should suffice to issue immediate payment. While some will take advantage of a more streamlined process this can be cleaned up on the backend. People need help now.
Expand PPP: Opening up the Payroll Protection Program to rental property owners would provide the same much needed relief that was previously granted to other small businesses. Ensuring owners have the necessary funds required to provide safe and quality housing to tenants should be a priority to all citizens.
Allow the moratorium to expire: The unfortunate truth is a large number of tenants behind on rent are not experiencing financial distress, rather they are simply exploiting the current environment of no ramifications for not living up to their end of a lease agreement. The CARES Act funding for unemployment benefits has made relief available since Q1 2020. Allowing evictions to resume will not only clarify those actually in need, but will expose the bad actors and give property owners the ability to generate the revenue needed to sustain themselves.
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NYS Fair Housing Notice
Steven Luttman
Broker/Owner SJLincoln Realty
35 Bath Street, Ballston Spa NY 12020
(518) 309-8584