When the coronavirus pandemic first struck, millions of jobs were shed within weeks and millions of tenants instantly fell behind on their rent. In an effort to avoid a massive homelessness crisis, a national ban on evictions was put into place that's since been extended several times over. At present, it's set to expire at the end of July.
Of course, landlords have been screaming since the start of the pandemic that the eviction ban is doing them a major disservice. Many landlords derive their entire income from rent and don't have the vast resources large property management firms have to go without payments for months on end.
The worst part is that there's relief available for delinquent tenants in the form of a $45 billion pool of funds that came from the two most recent stimulus packages. That relief benefits landlords just as much as it does tenants -- namely, because that money is generally paid directly to landlords themselves. In fact, landlords can actually apply for rent relief on their tenants' behalf -- that is, if they can navigate the complexities of filling out an application.
Things are especially bad in New York. Not only did New York give out no money in rent relief during the month of June when its application system first opened up but applicants in the state have also been put through the gauntlet just to get a shot at those funds.
A poorly run system
Whereas other coronavirus aid has been disbursed at the federal level, rent relief funds were doled out to states to distribute individually. And that's caused a world of problems.
In New York, tenants owing back rent must make less than 80% of the area's median income and provide proof that their income was affected by the pandemic. That alone may not be such a difficult requirement to overcome.
What is challenging, though, is that rent relief applications in New York must be completed in the course of a single session. Given the amount of documentation that's required as part of the application process, that's been a tough ask.
For example, landlords who apply for rent relief on their tenants' behalf must submit a W-9 tax form, lease details, and banking information. Once all that information is gathered, landlords must then upload it onto a portal that may or may not crash, depending on the day.
And given that many landlords also function as their buildings' supers, tending to day-to-day maintenance issues and repairs, they can't afford to spend hours in front of a computer waiting for documents to go through.
Landlords were also initially told that they'd need to create a separate account -- complete with a separate email address -- for each building they own, making the process far more cumbersome for those with multiple properties in their real estate investment portfolios. Master accounts have since been authorized, but that didn't help landlords who endured the lengthier application process in the beginning.
A tough road ahead for landlords
While many landlords may be in line for rent relief funds, whether their tenants will manage to stay current on their payments going forward is a whole separate question. New York's unemployment rate is still considerably higher than the national average, and with so many people still out of work, it stands to reason that some tenants who qualify for rent relief may not yet be in a position to keep up with their ongoing payments.
Meanwhile, given where things stand with the new Delta variant, some cities may start imposing new restrictions in an effort to curb the spread of COVID-19. Those restrictions could, in turn, hinder both local and broad economic recoveries.
In light of that, we can't discount the possibility of the federal eviction ban getting extended yet again. And that's apt to leave landlords across the country in a very unfavorable spot, especially given how long it's taken for rent relief funds to reach them.