How COVID Policies have Exacerbated the Housing Crisis

The COVID housing crisis will have a lasting effect on the policies and processes that govern the rental industry. At the start of the pandemic, CDC orders protected non-paying tenants from evictions. However, landlords with non-paying tenants got little relief from their own financial hardships. That said, June 30^th marks the new expiration date of the current eviction orders. So, what awaits landlords and tenants once the eviction moratorium ends? Continue reading below as we examine the possible consequences of the COVID pandemic on the rental housing industry.

What is the Current Eviction Moratorium?

The eviction moratorium was initially enacted in September of 2020 to protect tenants who could not pay their rent during the pandemic. As the pandemic drug on, the CDC orders were extended several times. That said, the current orders are set to expire on June 30, 2021. Let’s review some key considerations regarding what these orders state below.

Who is Protected by the Eviction Moratorium?

While landlords cannot legally evict tenants who cannot pay rent due to the pandemic, the rent is still due. Eventually, tenants must fulfill their financial obligations under the lease agreement. Also, the eviction moratorium does not waive any applicable fees, penalties, or interest.

Also, protection under these orders is not automatic. In fact, all tenants on the lease must submit a CDC Declaration Form to their landlord confirming the following circumstances –

• Tenants actively tried to obtain all available government assistance for rent or housing.
• Taxable income in 2020 was below $99,000 (or $198,000 if filing jointly)
• The tenant was not required to report any income to the IRS or received a stimulus check under the CARES Act.
• Complete rental payments were not possible due to the tenant’s substantial loss of income, compensable hours, a lay-off, or extraordinary out-of-pocket medical expenses.
• Tenants made every effort to make on-time partial payments of as much as their circumstances allowed.
• An eviction would force the tenants to move into a shared or crowded living situation or result in homelessness.

Emerging Effects of the COVID Housing Crisis

The eviction moratorium protected many vulnerable tenants from eviction during the worst public health crisis of the century. However, as the acute effects of the pandemic subside, what happens now?

Federal Funding Has Not Done Enough

During the unprecedented COVID housing crisis, the federal government pledged billions in rent relief and emergency aid programs. That said, these funds are just a drop in the bucket for financially strapped landlords and tenants.  Furthermore, unprepared local governments imposed stipulations, reimbursement caps, and added requirements in an effort to distribute funds equitably. While they are designed to help, these steps to relief can seem like red tape to those desperately in need of funds. Meanwhile, back rent continues to add up.

Mom-and-Pop Landlords are Looking to Sell

While the COVID housing crisis has strictly regulated rental, the rest of the housing market is booming. A shortage of properties on the market combined with high demand from buyers trying to take advantage of low rates created a strong sellers’ market. Thus, leaving landlords to wonder – is it worth it to keep holding on, or should I sell and cash in?

Around 50% of all US landlords are not large corporations but instead small mom-and-pop owners or individuals. While corporations cater to the luxury high-rise clientele, smaller landlords provide more affordable housing options. That said, small landlords carried a heavy burden of back due rent during the pandemic, payments they rely on to pay their own expenses.

That, combined with a strong seller’s market, means selling an investment property is an attractive option to stave off further financial hardship. Plus, it is a way landlords can get around the eviction restrictions and cover their own mounting bills. However, if individual landlords choose to give up renting in favor of selling, it may lead to a shortage of affordable housing.

Communities of Color Hit Hardest

Even before the pandemic, communities of color faced a higher rate of eviction, higher poverty rates, greater unemployment rates, and a lack of affordable housing options. Sadly, these issues are only made worse by the circumstances of the pandemic. Renters, already spending a large percentage of income on housing, have found it difficult to make ends meet as much of the country faced record-high unemployment rates. Moreover, job growth is typically slower to recover in these communities. Thus, eviction is a constant looming worry for many residents more than ever.

The Effect of Evictions on the COVID Housing Crisis

After the CDC eviction order expires, tenants can once again face eviction for non-payment. That said, a successful eviction does not mean all of a landlord or tenant’s problems go away. So, continue reading below to see the potential effects that a sudden wave of evictions may have.

How an Eviction Affects Landlords

For landlords, eviction can be a costly and time-consuming process. Plus, for owners already due thousands in back rent, the cost of eviction proceedings is especially hard to swallow. On average, filing a complaint cost between $100 to $500, depending on your property’s location. Furthermore, if the sheriff’s office needs to serve the tenant’s notice or perform a physical eviction, there are added costs. Typically, this costs anywhere from $50 to $400.

While regaining control of your rental brings peace of mind, more costs are sure to follow. Landlords must now pay for turnover repairs, cleaning, and marketing to find a new tenant. Under the circumstances, finding a qualified tenant can take longer than usual. Thus, owners must prepare for the fact that regular income could still take time.

The Effects of Eviction for Tenants

An eviction on your record can create roadblocks to finding housing in the future, regardless of the circumstances. This can greatly limit the available housing options tenants have, which only perpetuates the lack of better opportunities.

In addition to financial hardship, eviction can impact an individual’s well-being and mental health. Especially now, since tenants have likely dealt with job loss, income loss, illness, seclusion via stay-at-home orders, and constant worry over losing a roof over their head. So, eviction may serve as a breaking point.

How Evictions Affect the Community

Widespread eviction can harm the surrounding community. Let’s review some of the potential consequences of a wave of evictions below –

• Overcrowded Living Quarters or Homelessness – For tenants that could not make full and timely rental payments, an eviction only exacerbates an already struggling financial situation. Therefore, finding and affording alternate housing is a challenge. With that, the rate of homelessness and the amount of individuals utilizing shelters is sure to rise.
• Concerns for Public Health – Overcrowded conditions in homes or shelters can work against public efforts to combat the virus. Furthermore, as tenants congregate or become transient, transmitting and containing the virus becomes more challenging.
• An Increase in Crime – Desperate times can cause people to make rash decisions. So, as the threat of homelessness is imminent, some individuals may use criminal activity to care for themselves or their families.

Long-Term Effects of the COVID Housing Crisis

While the pandemic’s immediate concerns have subsided, the lasting effects remain. Going forward, the COVID housing crisis demands pointed action from federal, state, and local governments. Take a look below at some of what housing advocates believe needs to happen.

• Provide tenants access to legal assistance facing eviction
• Invest greater resources to affordable housing efforts
• Expand upon federal, state, and local rental assistance programs
• Raise the minimum wage to help to improve the financial health of renters
• Boost public benefits that could help reduce the frequency of evictions

That said, no solution is simple, and creating policies to address concerns will require a multi-faceted approach. The temporary halt on evictions protected some but not all vulnerable tenants. Plus, back due rent continued to accrue, causing more stress for all parties involved.

As we advance, emergency aid and assistance programs need more efficient implementation and funding distribution. In addition, policies need to better balance the needs of both tenants and landlords. The focus must remain to keep affordable housing available to those who need it the most.

How to Protect Your Rental Interests

Pandemic or not, keeping up with changing regulations, rent collection, maintenance, and tenant communications is a full-time job for landlords. The COVID housing crisis has highlighted the importance of following all rental laws exactly to avoid costly fines. That said, handling all these tasks can be overwhelming for landlords who are trying to stay afloat.

But what if you could rely on an experienced industry professional to look out for your best interest?

At Bay Property Management Group, we understand the unique challenges both landlords and tenants face during these unprecedented times. Our focus is solely on property management, and our expert team of industry professionals can guide you through the confusion. Whether you need help filing an eviction, marketing a vacant unit, or coordinating maintenance needs, BMG can handle all day-to-day operations, so you do not have to. Give us a call today to learn more about the benefits of full-service professional property management.