When the COVID-19 pandemic hit the United States a year ago, federal, state, and local governments acted quickly to protect home renters with eviction moratoriums. Until recently, however, there was insufficient government support for rent support.
From the beginning, the National Association of REALTORS® has spoken out in favor of federal rental support, starting with a coalition letter that will be released on March 19, 2020, days before the first COVID-19 relief law, coronavirus aid, aid and of Economic Security, was dispatched (CARES) Act. That bill included funding states to deal with the COVID crisis, including providing rental support. More than 21 states have provided some form of rental assistance, but funding has been limited and assistance has often been aimed at renters with the lowest incomes.
The CARES Act also included a 120-day eviction moratorium. The federal moratorium was extended in early September after former President Donald Trump issued an executive order asking the Department of Health and Human Services and the Centers for Disease Control and Prevention (CDC) to consider whether the extension was warranted was to stop the spread of COVID -19. The current CDC ordinance extends the moratorium to at least March 31, 2021. In addition, property owners with state mortgages have been banned from eviction from tenants, and eviction moratoriums have remained in place in about a dozen states and states as of mid-February in many local areas.
NAR's message to lawmakers throughout the pandemic was that moratoriums without adequate rental support place a growing mountain of unpaid debt on tenants. In the meantime, home owners who rely on rental income may not be able to pay their mortgages or maintain their properties.
Federal aid came in December 2020 in a spending bill that included $ 900 billion in stimulus measures. One provision called for $ 25 billion in rental assistance to states and communities with at least 200,000 people. The American rescue plan, passed in March 2021, approved an additional $ 21.55 billion. The program is run by the Finance Department, and states and eligible locations were required to apply for funding by January 12, 2021. Finance distributed the first round of funding in the last week of January and on February 22nd. The Biden administration released updated FAQs for states to use in creating their programs and paved the way for funds to be paid out to eligible housing providers and renters.
Each jurisdiction can establish its own program rules under the law. The law says:
- 90% of all funds received must be used for rent support or utility bills.
- The rent support can include the current rent, the arrears rent and the future rent of up to three months for a total of no more than 12 months (with some exceptions up to 15 months).
- The overdue rent can be from March 2020.
- The rent support is to be paid directly to the housing provider, unless the housing provider refuses. In this case, the support money goes to the resident.
Eligible tenants include those who earn less than 80% of the local median income based on 2020 income or current income. In addition, the beneficiaries must be eligible for unemployment benefit or have had an income reduction and are at risk of housing instability. The American Rescue Plan has set aside $ 2.5 billion for scholars in need, very low-income families who spend more than 50% of their income on rent or live in substandard housing. Tenants can apply for assistance directly, or housing providers can apply on behalf of tenants.
Expect significant differences between states in implementing the program. Some states may simply adapt an existing program they offered through CARES. Others will create new programs. Most of the money is distributed by housing authorities, housing finance agencies or municipal development agencies.
In the meantime, NAR will continue to seek additional rental support funds. The Urban Institute's most recent analysis found that the need for unpaid rent was closer to $ 60 billion by January 2021, so the $ 46.55 billion allotted so far won't be enough. In January, President Biden extended the eviction moratorium to March 31, 2021, and further extensions are possible. NAR has encouraged states to streamline their rental support distribution programs and not consider requirements and burdens that slow participation. Only when the total rent back has been paid can tenants feel relieved and housing providers find stability for their properties.