This move has been applauded by some as a way to stabilize housing and help those who are struggling financially due to Covid. But the evidence speaks directly to the contrary. The government imposing its control over rental properties is highly problematic, with repercussions for both tenants and property owners.
A policy that forces property owners to provide temporary housing without recourse during Covid is not too dissimilar from the government handing out checks that are encouraging people not to work. According to the Department of Housing and Urban Development (HUD), the median rent in the United States is $909 a month, slightly lower than the median mortgage of $975. Consider the following statistics:
While some might view these facts as good news for tenants, it ultimately leads to bad outcomes. Indeed, without having the recourse of eviction in the event of non-payment, many landlords are raising their approval criteria. On this factor alone, it will likely be harder for the tenants who didn’t pay rent during the moratorium to get approved by future landlords if they chose to go to a different rental home post-pandemic.
Thus, a ban on evictions for the failure to pay rent is ultimately just another piece of the puzzle that encourages Americans not to work and causes collateral effects as well. The only difference is that instead of the federal government using taxpayer dollars to write checks, property owners are forced to foot the bill until the moratorium is over and they can get their rent payments back.
This places many property owners at great financial risk if rental properties are not bringing in income. Approximately half of all rental units are owned by small investors, referred to by HUD as “mom and pop landlords.” The average rental property owner receives 31 percent of their annual income from their rental properties. With so many small business owners already struggling, such a dip in income has led to even more financial hardship, leading to increased debt and even rental property foreclosure.
Government interference in the economy has a consistent track record of generally causing more problems than it solves. The government’s recent move hurts tenants and property owners in untold ways. Only time will tell what the major repercussions will be from such government overreach.