Congress Needs to Help Renters & Property Owners Recover from COVID-19
by Charles Tassell, COO, National REIA
The Coronavirus (Covid-19) is dominating the headlines, news, and in many cases the fears and concerns of many! Congress has passed two bills addressing various aspects of the impact of Covid-19. The first was an $8 billion plan to reinforce Health Care organizations and ensure funds were available for necessary logistics. The second passed just days ago, referred to as Phase II, implemented new tax credit programs for family and medical leave for small businesses, among other things. Phase III is under way and the long-term strength of our nation’s economy hangs in the balance as lawmakers decide how best to provide relief from coronavirus-related hardships. Thus far, Congress and the Administration have offered up several solutions to support economic prosperity and as they decide how best to proceed, it’s our duty to make the real estate investor’s case.
With issues ranging from local municipalities banning evictions to HUD placing a moratorium on single family foreclosures and evictions at properties with FHA loans or Section 8 funding, the financial impact for a property owner can range from dramatic to overwhelming.
The housing coalition, of which National REIA is a member, is encouraging their collective membership to reach out to Congress about four different, but related issues. In order to provide the most effective relief to our residents and the industry, we are suggesting a two-pronged approach: Congress should provide direct assistance to renters as well as support for impacted property owners and operators.
First, renters displaced by Covid-19 directly or indirectly, will need direct, sustained assistance. Congress should provide short-term financial assistance for renters, expand unemployment income for individuals who lose their job because of COVID-19 and exclude unemployment income from taxes for 2020.
Second, most rental properties are owned by individuals and small businesses that must pay mortgages, utilities, payroll, insurance and taxes. If residents cannot pay their rent because of COVID-19, then owners are at risk of not meeting their obligations. Owners need mortgage forbearance and flexibility. The impact of significant defaults among single and multifamily housing could serve as a catalyst for a repeat of 2008.
Third, there needs to be specific guardrails for eviction moratoria. Knee-jerk reactions to blame property owners for requiring rent ignores the basic facts of housing cost. We caution policymakers against blanket eviction moratoriums. However, if imposed, any federal or state moratoria on evictions should be targeted to COVID-19-related circumstances and include the following guardrails: A maximum 45-day time frame with possible extensions; preservation of the right of housing operators to evict for other lease violations such as property damage, criminal activity or endangering other community residents; and no moratorium on previously filed proceedings unrelated to Covid-19.
Finally, there needs to be targeted tax relief for individuals and affected industries, such as: Payroll Tax Cuts, Unemployment Compensation & Net Operating Loss Carryback: allow net operating losses generated in 2020 to be carried back for three years.
With mortgage markets at risk, now is the time for Congress to act decisively and support both sides of the rental housing market: 44 million families reside there and it is the largest sector of small business in the country – it needs to be stable!
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