Socialist rent restructuring is not the answer
Liberals never let a crisis go to waste, and sadly for America’s landlords and real estate developers, the current pandemic is no exception.
Far-left lawmakers including members of “The Squad,” Reps. Ilhan Omar, D-Minn., Alexandria Ocasio-Cortez, D-N.Y., Rashida Tlaib, D-Mich., and Ayanna Pressley, D-Mass., are exploiting the crisis to advance their social justice warrior agenda at the expense of property owners. They seek to punish landlords by forcing them to provide free rent for all tenants impacted by the coronavirus.
Don’t let them. For if Omar’s bill, introduced last week and titled the “Rent and Mortgage Cancellation Act of 2020,” gets passed, it’ll be a disaster for our economy, job creation, tenants, landlords, real estate developers, banks and even state governments whose budgets will suffer massive tax revenue loses as a result.
Omar’s bill says all renters and mortgage holders don’t have to pay their monthly rents or mortgage obligations — regardless of income. A rent moratorium that lasts for one calendar month following the end of the national emergency. A crisis, mind you, that could extend for many months as experts predict a resurgence of the virus in the fall and winter.
“Landlords need to show compassion and humanity for those impacted by the coronavirus but economically capable renters should not view this moment as a chance for a free ride,” one of Boston’s largest apartment owners, Bruce A. Percelay, chairman of the Mount Vernon Company said in a statement. “Respecting contracts and obligations are what keeps our system together and when that ethic begins to disappear, the threads that hold everything together will fall apart.”
The bill calls for the creation of a government fund to be established and run by the Department of Housing and Urban Development where landlords can go to recoup crushing rental income losses. Here’s the kicker: They’ll only qualify for relief if they accept a laundry list of misguided requirements such as a five-year rent freeze and other over-the-top demands only a radical liberal or card-carrying socialist could love.
Some of these extreme demands require landlords to be barred from refusing to rent to ex-convicts, those with bad credit histories or illegal immigrants.
It’s worth stating the obvious that if landlords don’t get paid by their tenants, then they will no longer have the funds available to do maintenance repairs or other needed property improvements. It also doesn’t protect tenants, or society, if landlords go broke and have to default on their loans. Apartment buildings could go into foreclosure, teeing up another banking crisis.
“Those activists who are calling for a national rent strike are creating a risk of economic anarchy which will damage our system beyond repair and ultimately hurt those who it is trying to help,” said Percelay. “Mass foreclosures of rental properties both large and small will result in diminished supply and financial havoc.”
Not to mention the loss of hundreds of thousands of jobs. Real estate developers who get burned financially on lost rental income would no longer build housing units, hotels, restaurants and other properties, which means lost jobs for construction workers and related industries.
A far better approach is to have tenants work something out privately with their landlords. Get on a reasonable payment plan that works for both parties without the government inserting itself. When the government does intervene, it inevitably fails to understand the chilling ripple effect these “feel good” measures inflict long term.
It’s important to note that many states have already passed bills that protect tenants from being evicted for failing to pay their rent during the crisis. That’s a good thing. We want protections in place for citizens who are truly struggling. But expecting landlords to foot the bill for all tenants regardless of income goes too far.
“Putting landlords and lenders in the middle of a socialist restructuring of the housing market is not the answer,” said Percelay.