UK Markets closed

Democrats should ease up on landlords

·Senior Columnist
·6-min read

Not every landlord is a slumlord. There are even some Democrats who hold leases and collect rent.

Yet landlords are the presumed enemy as Democrats fret over what to do about the end of the federal eviction moratorium. As of August 1, there’s no longer a federal barrier to landlords evicting tenants who can’t pay their rent. Some states and cities still ban evictions, but that only covers about one-third of the country, leaving several million tenants who are behind on their rent newly vulnerable to eviction.

The Center for Disease Control and Prevention used emergency powers to impose the current eviction moratorium last year. But a June 29 Supreme Court decision indicated the court would strike down any extensions of the moratorium past July 31, unless Congress passes legislation making it federal law. That would require at least 10 Republican votes in the Senate, to overcome the filibuster, and those votes don’t seem to exist. So Democrats who have narrow majorities in both the House and the Senate probably can’t pass a law preventing evictions, and President Biden says he lacks authority to do it by executive action.

Democrats are now squabbling among themselves about whom to blame for the lapsed renter protection, with the usual liberal-moderate split. They haven’t attacked landlords yet, but that seems inevitable with evictions now underway and the media sure to begin highlighting the plight of newly homeless tenants. Landlords are not the enemy, however, and lost in the political posturing is the fact that landlords have bills to pay of their own, including mortgages, utilities and property taxes. If landlords are supposed to provide free housing during recessions, then somebody needs to rewrite most of the leases in America.

Kate Barrington, a rent relief case manager from Crossroads Rhode Island, left, talks with Luis Vertentes, a tenant from East Providence, R.I., second from right, during a meeting prior to an eviction hearing, Monday, Aug. 2, 2021, in Providence. Rhode Island tenants facing eviction after the lifting of a federal moratorium on being ousted for unpaid rent plead their case in court. Vertentes agreed to leave his residence, which he has not paid rent on in four months, in about three weeks. At right is landlord Roy Loiselle, second from left, is attorney Murray Gereboff. (AP Photo/Charles Krupa)
Kate Barrington, a rent relief case manager from Crossroads Rhode Island, left, talks with Luis Vertentes, a tenant from East Providence, R.I., second from right, during a meeting prior to an eviction hearing, Monday, Aug. 2, 2021, in Providence. Rhode Island tenants facing eviction after the lifting of a federal moratorium on being ousted for unpaid rent plead their case in court. Vertentes agreed to leave his residence, which he has not paid rent on in four months, in about three weeks. At right is landlord Roy Loiselle, second from left, is attorney Murray Gereboff. (AP Photo/Charles Krupa)

[Are you are struggling tenant or landlord? We'd like to know how you're coping.]

Primary source of income

There are undoubtedly some ruthless landlords who want nothing but their money and will do anything to get it. Bigger corporate landlords have access to other aid programs Congress has established, and many of those can probably afford to continue offering forbearance. But most of the nation’s landlords are individual investors, including “mom and pop” landlords who own a few units as their primary source of income. Some rely on those properties to fund retirement. While some landlords unfairly harass their tenants, there are also tenants who are abusing the eviction moratorium to dodge rent, with no intention of ever paying it back. No single anecdote captures the complexity of the problem.

Congress has passed $47 billion in aid for qualifying renters, which is supposed to be indirect aid for landlords, since they’re the ones who ultimately get the money. But the program is still under construction. The Treasury Department says states and cities have distributed just $3 billion of that money, or less than 7% of what’s available. Treasury isn’t sure why so much money is sitting unused, but it’s not all that surprising for a new, temporary program a lot of people don’t even know about, with varying application procedures across the country.

Landlords are allowed to apply on their tenants’ behalf for federal aid covering current or back rent, as long as the tenant agrees and signs a paper or electronic application. But there are breakdowns everywhere. An industry group representing landlords recently sued the federal government for $26.6 billion, arguing that’s the amount of financial loss landlords have borne so far. The group cites research showing that tenants owe roughly $73 billion in combined back rent. If states and cities allocated the entire $47 billion Congress has provided for rental assistance, that would still leave nearly $27 billion in uncovered costs related to the federal eviction moratorium.

People from a coalition of housing justice groups hold signs protesting evictions during a news conference outside the Statehouse, Friday, July 30, 2021, in Boston. (AP Photo/Michael Dwyer)
People from a coalition of housing justice groups hold signs protesting evictions during a news conference outside the Statehouse, Friday, July 30, 2021, in Boston. (AP Photo/Michael Dwyer)

It’s safe to assume that figure is overstated, like the opening bid in many lawsuits. But even so, and us-versus-them approach to the problem—landlords-versus-tenants—won’t solve it. Since everything in America is politicized, however, there’s a good chance this will be the next arena for battle between the establishment and the disenfranchised.

Affordable housing problem

The United States has a legitimate affordable-housing problem. Biden and his fellow Democrats have plans to address that, and it should go through the normal legislative process, to the extent there is such a thing. Some liberal Democrats, however, want an indefinite eviction moratorium as a de-facto affordable housing plan. That would pervert the original intent of the moratorium and damage Biden’s thankless effort to convince moderate voters his party understands at least a little something about a capitalist economy.

Tenants sign contracts with landlords—leases—that need to be generally bulletproof for the system to work. If the government can abrogate leases for political purposes, all sorts of bad things will happen. Landlords will further tighten the terms of leases to reduce the odds they’ll lose money. Rents will go higher to compensate landlords for the added risk of loss. Local governments will pass even more rules to protect tenants, pushing costs even higher.

A rental sign is posted in front of an apartment complex Tuesday, July 14, 2020, in Phoenix.   (AP Photo/Ross D. Franklin)
A rental sign is posted in front of an apartment complex Tuesday, July 14, 2020, in Phoenix. (AP Photo/Ross D. Franklin)

Leases need to remain more or less sacrosanct. Congress has shown willingness to protect vulnerable tenants in an extraordinary circumstance, and ponied up the money to do it. Treasury says it is probing why payouts are taking so long and looking for ways to speed the delivery of relief. When people are hurting, crass opportunists look for a villain they can blame, while somehow profiting in the process. For now, blaming landlords for the plight of tenants is cheap theater. When the remaining billions have gone where they’re supposed to and the pandemic is in the past, that will be the right time to put landlords under the microscope.

Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.

Read more:

Get the latest financial and business news from Yahoo Finance

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting