Eviction Moratorium: What This Means for Individual Landlords

Eviction Moratorium: What This Means for Individual Landlords

This is the second post in our series exploring the impact of the eviction moratorium. You can check out the first post here

On September 4, 2020, a temporary national eviction moratorium on evictions for nonpayment of rent was announced by the Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services (HHS). The order was introduced to help renters who were unable to pay their rent due to the impact of the pandemic. It was originally set to expire on December 31, 2020 but had been extended several times before being allowed to lapse on July 31st, 2021. On August 4, 2021, the CDC Director signed an order extending the moratorium once again. This federal order extended the protection of tenants in certain counties through to October 3, but has since been blocked by the Supreme Court.  

In this post we are exploring what the moratorium has meant for individual Landlords.

Unpaid Rent = No Income

The biggest impact the moratorium has had on landlords is also the most obvious – landlords have been left with no income from rent payments yet, in many cases, they were still responsible for their own mortgage, taxes, and other bills. 

According to a study by the Aspen Institute, around 15 million people are currently behind on their rental payments and, according to the National Equity Atlas, those households owe over $21 million to landlords. 

While some landlords may have emergency funds in place to cover one, maybe two months of missed payments, very few individual landlords will have funds in place to cover multiple months of unpaid rent.

Unlike corporations, businesses, and agencies, individual landlords are likely to only own 1 or 2 rental properties. So, while tenants are required to pay accrued rent when the moratorium is lifted, it may be too late for individual landlords. Especially those who don’t have other properties generating rent and other means of income, if they are unable to make their own mortgage payments, they may lose their property through foreclosure.

Little To No Relief Reaching Landlords

There has been little to no relief reaching landlords so far. Despite Congress allocating $46 billion to assist, only a fraction of those funds have reached tenants, and even less has reached landlords, according to Treasury Department data.

There appears to be two main reasons for this: 

  1. Confusion surrounding availability of relief.
  2. The process requires the cooperation of the tenant.

Confusion Surrounding Availability of Relief

According to the Urban Institute, more than half of renters and 40% of landlords are unaware that aid is available to them, so are unlikely to be applying for relief. In addition, uncovering what is available isn’t straightforward. The same report from the Urban Institute states that, “Less than 6% of landlords and 11% of tenants indicated that they applied for federal emergency rental assistance.” This indicates that even when landlords and tenants are aware of these funds, there is still another stumbling block in the process. 

Each state has its own system and process for distributing funds. Some states require the landlord to start the application process and the tenant to complete it. Others require the tenant to start it. The need for states to put new systems in place and the fact that they are also dealing with staff shortages due to the pandemic have caused significant distribution delays.

Uncooperative Tenants

The process of claiming available funds does require tenant cooperation. Some landlords have reported that their tenants are refusing to complete the application forms.

For some tenants, online-only applications can pose a barrier, especially for those who are not tech-savvy, who are aging or who do not have easy access to the internet. Others are simply overwhelmed to the point of inaction.

Penalties For Landlords

Another way in which the moratorium has impacted landlords is in the penalties for failing to comply. A landlord who evicts their tenant despite having received the written notice of their status, can face up to a $100,000 fine and 1 year in jail. Combined with undergoing months without receiving rental income, the financial implications of the moratorium add up quickly for landlords.

What Happens Next?

The extended moratorium was to remain in effect until October 3rd, but on August 26th the US Supreme Court stated that the CDC did not have the power to impose the moratorium and as such, the extended moratorium was blocked.

What will happen now is uncertain and is likely to vary state by state. It is thought that there may be delays in many states as they work through the backlog of eviction cases.