Industry Urges More Rent Relief to Avoid ‘Domino Effect’

The multifamily industry and housing advocates are pushing for more federal measures to avoid potentially dire consequences for renters and multifamily owners.

Image via Unsplash

Days after the federal eviction moratorium and expanded unemployment insurance expired, the multifamily industry and housing advocates are worried about what happens next for renters and property owners in the midst of the COVID-19 pandemic.

Measures enacted by the CARES Act expired last week, including a moratorium on evictions at multifamily properties back by federally insured loans—estimated to represent about a third of the multifamily market nationwide—as well as the extra $600 a week in unemployment benefits.

READ ALSO: Apartment Execs Flag Weakening Market

The biggest impact to multifamily could come from what happens—or doesn’t happen—in Congress. In May, the House passed the HEROES Act, a $3 trillion coronavirus relief bill. Since then, it failed to gain any traction in the Senate. Crucially, the bill included a $100 billion emergency rent relief fund, a measure the multifamily industry and housing advocates had been pushing for to help renters behind on rent payments and to stabilize the overall multifamily market. The bill also included an extension as well as an expansion on eviction moratoriums, expanding the requirement beyond federally-backed properties.

The most recent legislation to be introduced came earlier this week, when Senate Republicans unveiled a $1 trillion stimulus package dubbed the HEALS Act. The bill includes a new system of additional $200-per-week unemployment benefits—down from the $600 that has been in place since March. Also included in the package is another round of $1,200 stimulus payments.

What’s not included is an extension of the federal eviction moratorium and significantly less funds geared toward housing relief. The HEALS Act includes $3.3 billion for lost income for tenants in low-income housing programs—a far cry from the $100 billion in rental assistance the industry and advocates had hoped for.

“We’re not there yet, but we don’t have to let a public health crisis become a housing crisis,” she said.

For trade groups representing the multifamily industry, waiting to see whether a federal relief bill will include a fund for renters has been top of mind.

“We have tremendous concern over what happens if we don’t get the next round of relief right,” said Paula Cino, vice president for land use policy at the National Multifamily Housing Council. She added that there could be a little bit of a cushion between CARES Act programs expiring and when the industry could really see big impacts, which she estimates could start to be felt in the fall.

In the absence of a federal rent relief fund, many cities and states started their own. However, the funds are limited and have been quickly exhausted in some cases by an overwhelming response from renters in need. In Houston, which has a renter population of nearly 2 million according to 2017 Census data, a $15 million relief fund created by the city was drained just 90 minutes after it opened to applicants.

“It’s a great recognition on the part of states and local government to establish these local assistance programs, but it’s not nearly enough,” said Cino. “The programs are providing millions when we need to be talking about billions. The only solution is a big infusion of federal spending that needs to happen sooner rather than later.”

A “Domino Effect”

Researchers from the Joint Center for Housing Studies at Harvard University have estimated that rental assistance for Americans with at-risk wages—including those in services, retail, recreation, transportation and travel, and oil extraction—could range anywhere from $274 million up to $7.5 billion.

Both housing advocates and the trade groups for the multifamily industry are on the same page in the call for rent relief measures, with the exception of further expanding eviction moratoriums, said Cino.

She described the potential for a “dangerous domino effect” that would start with renters not being able to pay their rent and end with owners losing their properties on a significant scale.

“We’re not there yet, but we don’t have to let a public health crisis become a housing crisis,” she said.

There are also worries that increased evictions could exacerbate the COVID-19 pandemic and lead to a second wave public health crisis. Mel Jones, associate director at the Virginia Center for Housing Research at Virginia Tech, said in a statement that when households become homeless, it can often lead to families living with family members or friends in overcrowded conditions that increase the risk of transmitting the virus.

“This is the time to offer rent protection, a safety net for our country’s worker and our neighbors,” said Jones in prepared remarks. “Offering rent assistance will support individual household, housing providers, landlords, our communities and our economies.”

You May Also Like