Legislation passed by Congress to stave off economic collapse may create problems for rental-housing property owners, according to a release from the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA).
“While there are a number of important provisions included that will be helpful to the industry and its renters, there are others that will create substantial challenges for rental-property owners and imperil housing stability Americans need and deserve during this crisis,” the two associations said in the statement.
“To its credit, Congress took important steps to provide relief to affected American renters and property owners. Boosting funding to U.S. Department of Housing and Urban Development (HUD) programs, expanding unemployment benefits and providing substantial tax relief are welcome resources. Yet, more must be done. NMHC and NAA have identified three areas where the legislation, while well-intended, falls short and will be detrimental to the stability of the rental housing market.”
Three areas where legislation falls short for rental housing
NMHC and NAA have identified three areas where the legislation, while well-intended, falls short and will be detrimental to the stability of the rental housing market.
No. 1 – Eviction moratorium not tied to COVID-19
“First, while we understand the intent of the national eviction moratorium included in the legislation, lawmakers inadvertently neglected to specifically tie the moratorium to those affected by the COVID-19 crisis.
“Instead, what should be a limited protective step is expanded to those who have not been financially impacted by the pandemic. This is already creating an expectation that unaffected renters do not have to meet their lease obligations.
“The unintended consequences of the eviction moratorium will wreak havoc on the stability of the rental-housing market and places it out of step with similar state and local actions. Congress must swiftly address this discrepancy,” the associations said in the statement.
No. 2 – More emergency rental assistance needed
“Second, the current package provides substantial financial support to residents though HUD and unemployment insurance; however, more direct emergency-rental assistance is necessary—particularly for those who do not presently receive federal housing assistance but now find themselves needing it.”
No. 3 – Mortgage forbearance needs to extend to all rental housing
“Congress provided mortgage forbearance for multifamily property owners negatively impacted by the COVID-19 outbreak. The legislation, however, only provides this relief to owners with federally backed mortgages, such as those through the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. This protection needs to be expanded to all types of mortgages. Owners and operators are tasked with ensuring the viability of apartment communities. They, too, are experiencing financial hardships sometimes tenfold as renters in the communities across the country struggle.
“Further, the provision limits forbearance to a 90-day time period, which is out of alignment with the 120-day eviction moratorium. Unless it is fixed, this disconnect could result in a mass wave of financial delinquencies and defaults from rental-housing providers of all types and sizes, jeopardizing the stability of entire communities,” the associations said in the release.
More resources on COVID-19 from NMHC and NAA can be found here and here.
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