It's a sign of the times that when #cancelrent started trending on Twitter, the main accounts spreading it did not belong to members of the Democratic Socialists of America (for the most part), but rather to New York state legislators who're proposing yet another once-unthinkable policy intervention to assist people affected by coronavirus-induced business closures and layoffs.
"Tenants can't pay rent if they can't earn a living," said State Sen. Mike Gianaris (D/WF–Queens) last Friday. "Let's #CancelRent for 90 days to keep people in their homes during the #coronavirus crisis."
Tenants can't pay rent if they can't earn a living.
— Sen. Mike Gianaris (@SenGianaris) March 20, 2020
That same day, New York Gov. Andrew Cuomo (D) issued a 90-day eviction moratorium for both residential and commercial tenants statewide. Similar moratoriums have been issued by local and state governments across the country as one way of keeping people in their homes in the midst of the COVID-19 pandemic.
Federal agencies have also acted. The U.S. Department of Housing and Urban Development announced last week that it will suspend foreclosures for 60 days for all single-family homeowners with a Federal Housing Administration-backed (FHA) loan. FHA loans make up 12 percent of the mortgage market by dollar volume.
The Federal Housing Finance Agency said that it will offer mortgage forbearance through Freddie Mac and Fannie Mae for owners of multifamily housing who agree to suspend evictions.
Gianaris, tenant activists, and other like-minded legislators say these moves don't go far enough.
While an eviction moratorium will keep people in their homes temporarily, they say, it will do nothing to relieve tenants of their obligation to pay rent. They argue this sets us up a housing crisis a few months from now when the moratorium expires and tenants without the ability to pay months of back-rent are evicted en masse.
This is false.
Postponing evictions while allowing rent obligations to continue to accumulate only creates a bigger housing crisis in 3 months https://t.co/fTA3ZzxwVB
— Sen. Mike Gianaris (@SenGianaris) March 22, 2020
To prevent that, Gianaris introduced legislation Monday that would waive tenants' obligation to pay rent for 90 days if they've lost income as a result of the state's forced shutdown of non-essential businesses. Landlords would be able to deduct the rental income they lose as a result of this rent freeze from their mortgage payments.
The latter provision is a lifeline to building owners who argue that they too have bills that don't go away just because a tenant is out of work.
Suspending both rent and mortgage payments, however, just shifts these costs further down the line to banks and financial institutions who lent to landlords. If the return on their real estate investments goes to zero, lenders could also be in trouble.
Shifting costs from one interest group to another doesn't eliminate costs, it just changes who ends up bearing them. The rent freeze being proposed is a risky game of hot potato.
There's obviously a public health rationale for keeping people in their homes right now, particularly in New York City, which is experiencing the most severe COVID-19 outbreak in the country. There's also a sound case that the government should compensate people it puts out of work.
The best way to do that, however, would be through federal income assistance that allows everyone to continue to pay their bills. Cash assistance has the added benefit of transparency, as the costs of these closures will be on budget for everyone to see. Eviction moratoriums and rent cancelations, however, are more opaque, overly complex, and could create problems down the road.