It's no secret that New York City has been notably hard hit in the course of the coronavirus outbreak. When the crisis first erupted on U.S. soil, New York City was deemed its epicenter. And in the months that followed, countless residents abandoned the city in search of larger spaces. That not only hurt residential landlords but also battered small businesses.
But that's not the only pain New York City landlords have felt. Many tenants have fallen behind on their rent since the pandemic began, and a long-standing eviction moratorium left landlords with very little recourse. And while the Supreme Court recently halted an attempt to extend a national eviction ban, New York extended its own set of renter protections that's now set to remain in place through early 2022.
All this is bad enough in its own right. But now, landlords may face additional challenges in the wake of boosted unemployment benefits running out.
Even more hardships for landlords
When the $1.9 trillion American Rescue Plan was signed into law in March of 2021, it included a provision that boosted unemployment benefits by $300 a week through the beginning of September. And while many states made the decision to pull the plug on that boost over the summer, New York wasn't one of them. Given the state's higher-than-average jobless rate, that made sense.
But effective Labor Day, that weekly $300 boost is no longer on the table. That means that an estimated 800,000 people, or about 10% of New York City's population, are losing that extra money.
To be clear, that doesn't mean all jobless benefits are off the table. Unemployed workers can still collect their regular state benefits. But it means that renters who were already struggling to keep up with their housing payments may soon fall behind. Since New York landlords can't pursue evictions on the basis of nonpayment of rent until early 2022 (assuming there's no further extension of the state's current ban), that puts them in a very tough spot.
Of course, there is rental assistance money available to tenants behind on their housing payments. Those funds, in fact, are generally paid directly to the landlords who are owed that money.
The problem, however, is that many states have been very slow to disburse that aid, and New York is one of them. New York was allocated more than $2.4 billion in rent relief funding. But as of late August, it had only distributed $200 million to about 15,500 households. The state has also been criticized for its cumbersome application, which has been called a barrier to getting that aid into the hands of the tenants -- and landlords -- who are entitled to it.
Landlords may be in for months of hardship
Until New York is able to ramp up its efforts on the rent relief distribution front, landlords might really struggle to cover their own expenses. And now that so many jobless workers in New York City have lost their boosted unemployment benefits, the crisis could easily worsen before it gets better.
Economists have projected that New York City may not regain all of its lost jobs until 2024. Real estate investors with residential properties in their portfolios may therefore, unfortunately, be in for a rocky number of months, if not years, until the city is able to stage a more robust recovery.