We’re starting to see some increasingly serious calls to extend executive authority in a time of crisis to unprecedented levels in a number of large cities, particularly across the northeast. The issue at hand is once again the large number of people who were unable to pay their rent on the first of the month because they were put out of work when the government shut down their employers’ businesses. It’s a serious challenge to be sure, but the remedy may wind up being even worse. Renters in New York City have led the way in getting the #CancelRent hashtag trending and some mayors and governors have begun to listen.
Connecticut Governor Ned Lamont has issued an order allowing tenants to have their security deposits applied toward their rent. In New York City, Mayor Bill de Blasio is asking for the same type of arrangement. And one state senator in New York is asking Governor Cuomo to order that three months rent be “forgiven” instead of deferred. (CBS New York)
While there was already a 90-day moratorium on evictions in New York and a 90-day mortgage deferment in place, Sen. Michael Gianaris has been pushing to forgive rent payments for 90 days…
“What I’ve done is asked the governor to do this by executive order, which is within his powers, because we can’t wait,” Gianaris said.
Gov. Andrew Cuomo has said he wants to get to 90 days from now and see where we are.
As we’ve discussed here previously, all of these options are both problematic in terms of implementation and worrisome because they represent a massive overreach of executive power.
Landlords almost uniformly require applicants to put down a damage deposit before moving into an apartment. This is an insurance policy against tenants wrecking the joint before they move out and sticking the landlord with the repair bill. Can a mayor or governor simply order the landlord to wipe out that security deposit and apply it to unpaid rent with no suggestion that the deposit be replenished within a reasonable period of time? If the majority of the tenants in a given building do that, the financial hit to the landlord is going to be massive.
New York’s deferment of mortgage payments wasn’t such a bad thing because the lenders still get their money back at the end of the loan period. It’s a deferment, not a cancellation. But canceling rent payments entirely is another matter. If each of your tenants is suddenly allowed to legally cut 25% of your annual rental income on the property, that will likely send a lot of property owners into bankruptcy.
The only other option is to allow the landlords to seek relief from the federal government for the lost income. But all that does is shift the burden onto the shoulders of the taxpayers, many of whom are already dealing with being unemployed themselves.
I’m not saying I have a solution to offer as a replacement, unfortunately. It’s a very tough situation to be sure. Perhaps the landlords could be offered a compromise where rents are reduced for a three month period and they have to allow the tenant the option of paying the missed rent in smaller bits tacked on to the usual rent over the course of a year? That would soften the blow for the landlords while leaving more options open for the renters.
No matter how it plays out, allowing the executive branch of the government to order landlords to offer housing for free should be unacceptable, even during a declared emergency. Would the government be able to order restaurants to give their food away for free or force landscapers to go mow people’s lawns without being paid? There’s really no difference here and we shouldn’t cave in to executive demands so easily.
