After nine months of concerted advocacy by NAA and other housing organizations, Congress included $25 billion in Rental Assistance funds in the Consolidated Appropriations Act of 2021. While this is a legislative victory for struggling housing providers and their residents, it has not dissuaded various housing policy stakeholders from continuing to push eviction moratoria and other temporary pandemic eviction restrictions. These temporary policies are coinciding with longer-term policy proposals to reform state and local eviction processes, changes that would have adverse impacts on the operation and affordability of rental housing.
Eviction moratoria have become a ubiquitous feature of government response to COVID-19 in part due to academia’s support. A raft of studies were published at the tail end of 2020 focusing on evictions during COVID-19. Taken together, these studies form a duel set of narratives that can be used against the rental housing industry, first suggesting that eviction moratoriums are sound policy that protect residents from displacement and by extension contracting COVID-19. Secondly, these studies suggest that evictions cause housing instability and poverty, especially for low-income renters of color, and therefore should be restricted as much as possible. Both positions have been reflected in reporting from national media outlets like CBS, The Washington Post, The New York Times, and NPR.
The first narrative has pushed policymakers to continue relying on eviction moratoria, despite the fact they leave struggling renters accruing insurmountable debt that will eventually become due. The U.S. Centers for Disease Control and Prevention (CDC) recently extended its federal eviction moratorium through March 31, 2021 at the direction of President Biden. The extension means that a federal eviction moratorium has been in place for almost a year in conjunction with various state and local restrictions. That combination continues to produce a patchwork of requirements and constraints that force rental housing providers to absorb and operate under substantial losses.
However, the second narrative has greater long-term policy consequences. It implies that rental assistance, in combination with current renter protections, are insufficient to address the ongoing challenges of low-income renters directly affected by the pandemic. Policy proposals included in recently-introduced legislation from several state legislatures in January to address this perceived insufficiency fall into five categories. These include:
- Rent regulation, including rent freezes and rent forgiveness;
- Just cause eviction restrictions;
- Eviction diversion programs;
- Right to counsel; and
- Eviction screening restrictions.
These proposals were frequently debated before the pandemic, but now lawmakers and renter advocacy groups argue they are needed more than ever.
Adverse Housing Policies Given Renewed Emphasis
An apt example of how this narrative is affecting housing policy can be found in Maryland. Speaking about the recently passed $25 billion in federal rental assistance funds on a virtual meeting hosted by Renters United Maryland, Public Justice Center attorney Zafar Shah articulated what is an increasingly common opinion among renter advocacy groups: “It’s clear that relief money is not effective without a deeper reform of the eviction system and investing in holistic services that serve economically struggling households. We look to making housing justice happen for renters, homeowners and housing providers – to make it a top priority as Maryland builds back better.”
That position has been reflected in the five-bill Housing Justice Package introduced in the Maryland state legislature this session. One of those bills is The COVID-19 Eviction and Housing Relief Act. While it provides financial relief for housing providers through a statewide program that matches state and county funds, it would implement a series of adverse emergency renter protections, including a rent freeze, just cause eviction protections and an expansion of Governor Hogan’s eviction moratorium prohibiting all eviction filings except those in response to imminent threats through April of 2022. The just cause protections in the bill would prevent evictions for reasons not explicitly deemed as legitimate, as well as non-renewals of leases, something many renter advocacy groups claim is a loophole used to get around eviction moratoria. The remaining bills would establish an eviction diversion program and specific associated requirements for housing providers prior to filing evictions for nonpayment of rent, increase filing fees, create a right to counsel for renters in eviction cases and create emergency homeowner protections.
Depending on how they are structured, eviction diversion programs may be beneficial in facilitating alternative resolutions and access to rental assistance. However, placing additional restrictions and requirements on housing providers’ access to the eviction process, which represents the legal avenue of last resort for retaking possession of an apartment upon a resident’s violation of the lease agreement, will not solve the underlying financial instability of low-income renters that has only been exacerbated by the pandemic.
Implementing expanded eviction moratoria and increased regulation of rental housing would have adverse impacts on the supply of affordable housing. According to an October 2020 report by NDP Analytics and the National Leased Housing Association, low and moderate-income housing providers have experienced 11.8% decline in revenue and a 14.8% increase in operating expenses on average due to the pandemic, resulting in significant financial strain. If housing providers are unable to cover the property expenses and operational costs due to a lack of rental income, they may not be able to maintain their supply of rental housing and risk foreclosure. The buyers of these distressed properties may not keep them affordable, or even as rentals.
The proposed legislation will also negatively impact renter mobility and subsequently labor mobility. According to the Organization for Economic Co-Operation and Development: “Overly restrictive regulation of landlord-tenant contractual relationships is linked with lower residential mobility. To the extent that residential mobility is linked with labor mobility, this can be particularly undesirable during the post-COVID-19 recovery, which will require reallocation of labor and capital towards activities with more promising economic prospects.” Pandemic-induced job and income losses have placed many renters, particularly black and Latino adults, at increased risk of housing instability. As a result, renter mobility and housing supply impacts are likely to disproportionately effect these communities.
The Prevailing Narrative on Eviction and Poverty Is Not Universally Held
An August 2019 study by Yale economist John Eric Humphries, et al. calls into question the prevailing narrative that evictions cause poverty. Using a collection of seventeen years’ worth of Cook County court records, credit bureau records, and payday loans data, the study analyzed the financial strain of both evicted and non-evicted households before and after eviction court.
The authors contend that “it is difficult to determine to what extent those associations [between eviction and poverty] represent causal relationships, because eviction itself is likely to be a consequence of adverse life events.” Their analysis shows, regardless of case outcome, that households in eviction court displayed signs of financial strain in the form of falling credit scores, rising collections, and increased inquiries into payday loans two to three years before an eviction case was filled. Additionally, even though eviction negatively impacts credit access and durable consumption for several years, the effects observed were relatively small compared to the financial instability of both evicted and non-evicted renters experienced in the years preceding an eviction filing. While one academic paper does not settle this housing policy debate, it shows that the narrative of eviction causing poverty is not unanimously held in academic circles.
Unfortunately, many of the policies proposed to mitigate evictions in response to the prevailing eviction narrative have unintended consequences. They tend to harm the very population of renters they are designed to help while failing to address the underlying levels of financial instability these renters experience. Extending eviction moratoria and implementing unbalanced housing policy will continue to place financial burdens on housing providers, especially mom-and-pop landlords. The US was already facing a severe housing shortage before the pandemic began and losing a significant amount of existing housing stock to foreclosure is a real possibility. The only responsible solution that addresses the needs of both renters and rental housing providers is swift, substantial and targeted rental assistance that addresses both the current and prospective rental debt. Using more band-aids will not rectify this issue.
For more information on any of the policies referenced in this article, please email Alex Rossello, Manager of Public Policy or click the links below.