What the Latest COVID Stimulus Bill Will Mean for Landlords
The latest COVID-19 stimulus package, dubbed the “American Rescue Plan” by President Biden, has made headlines for huge child tax credits, $1,400 “instant” checks deposited into most tax-paying Americans’ bank accounts, and for $130 billion that will, at least in theory, result in the end of “online learning” and a return to physical school. As parents everywhere breathed a deep sigh of relief, the $34.2 billion that went toward the first significant expansion of Obamacare since it passed a decade ago went largely unnoticed.
What did not go unnoticed, however, is the “landlord assistance” angle of this package. Although tenant-advocacy groups may protest the move, this latest package earmarks $25 billion for rental assistance paid to landlords and not paid at tenant discretion. Unfortunately, it remains largely unclear how landlords will get that assistance and whether the previous stimulus package’s $25 billion was actually spent on landlord assistance or has been sitting quietly “on ice” while politicians decide what they are actually going to do with it.
Here is what we know for sure:
- According to Justia.com, both the CARES Act and the Consolidated Appropriations Act of 2021 (CAA) relied on tenants to “indirectly assist” their landlords by paying rent. However, many states enacted eviction moratoriums that may have discouraged this “indirect” assistance.
- The American Rescue Plan earmarks money that can go directly to landlords, but it also extends the federal eviction moratorium until the end of September 2021.
- Both $25-billion earmarks were funneled into the Emergency Rent Assistance initiative, placing $50 billion on hold until states could create “their own unique programs” (as Forbes described the process in mid-March) to help tenants pay outstanding rents. Ultimately, these funds are designated for use repaying back rents, but states disburse the money, which flows through the tenants to the landlords.
- Some states did set up programs to allow landlords to apply for repayment of back rents without tenant participation, but most of these programs were first-come-first-served or lottery programs, and most programs require tenants to prove hardship before they can qualify for rental assistance. Needless to say, this type of cooperation can be difficult to obtain when a tenant has not paid rent in a year since they often are actively avoiding their landlords!
- Programs tend to require concessions in order to gain access to rent payments. For example, landlords may have to extend an eviction stay for a tenant facing eviction or forgive portions of the unpaid rent. It is important to note that the American Rescue Plan does not require these concessions, but state-level programs are entitled to add this type of requirement.
- Industry experts say $50 billion is not enough. According to the Council of Large Public Housing Authorities, 11.4 million renters had accrued an average of $6,000 in back rent by mid-January 2021. This leaves a shortfall of $20 billion even if every single penny goes directly to a landlord missing those payments.