The Argument Against Free Rent
By: Andrew Martin
Tags: Business, Real Estate, Covid 19, Government, Housing

Image via Erik Mclean (Unsplash)

The Argument Against Free Rent

The pandemic is crushing renters but placing the burden on landlords is not the answer

A popular sentiment that has emerged from the chaotic landscape of the Covid-19 pandemic has been “cancel rent.” As Americans have lost their jobs and sources of income in significant and varying ways, the ability to pay rent has become increasingly difficult. While rent abatement is in theory a pleasant idea during a difficult time such as this, it’s neither practical, fair or a long-term solution.

In most communities, rent can eat up a large portion of an income. This is especially true in some regions of the country given the premium placed on residential and commercial spaces. With shelter-in-place orders devastating businesses and trickling down in other ways to those whose jobs depend on an open and reasonable economy has led to rent becoming a national problem.

While national eviction moratoriums, stimulus packages, PPP loans and individual rent relief agreements worked out between individual landlords and tenants have provided some relief, it has not been nearly enough to help lift the crushing weight that is aggregating with each passing month.

With eviction processes set to resume in the near future, the prospect of vast numbers of people on the precipice of losing their homes; many of whom having no safety net in place, is a potential tragedy of staggering proportions. However, waiving rent is a temporary solution that reallocates the problem instead of fully solving it.

Landlords are often depicted as wealthy and uncaring — trying to squeeze every possible penny out of their property. While that can certainly be true in some cases, it’s not a universal truth. According to a 2015 American Housing survey published by Time, a little less than half of all rental units in the United States are owned by individuals as opposed to business entities. These “mom and pop” landlords are much less likely to be able to weather not receiving rent for any portion of time.

Owning a rental unit doesn’t stop at depositing rent checks on every first of the month. The cost of maintaining a unit can be substantial and vary depending on the location and type of building. Mortgages, taxes, insurance, maintenance, utilities are just some of the ways that landlords are regularly laying out money for their property. In fact, good landlords are those who are spending money to keep their buildings kept up and safe.

Much like the loss of a job impedes a renter from paying their rent and puts their home in jeopardy, the stoppage or even delay of rent payments may have a similar result on the landlord.

Government, both federally and at state and local levels have sought to combat the rent crisis by halting evictions, providing aid and offering additional ways to assist renters in holding on. However, the protections have generally not been extended to the property owners of those units.

As small rental owner Greta Arceneaux of Los Angeles told Time, “I don’t understand how they can come up with all of this financial aid for the homeless, for renters, for agriculture, for big business, for airplanes. And they’re forgetting about the small mom-and-pop people that have two units or four units and serve such a great need in the community.”

There have been some public examples of landlords waiving rent for some period of time to help their tenants weather the Covid storm. It’s wonderful when that’s able to happen, but in most cases is simply not financially feasible. Ultimately, helping people survive a time of great struggle should fall more on the government than individuals or businesses.

This should be the part where denouncing one idea demands the offering of an alternative. I’m sad to say that I don’t have such a solution. Our elected officials and government structures and institutions should be doing more. Perhaps they could devise a stimulus proposal that incorporates free rent for a certain period of time (where the landlords are paid by Washington). Perhaps there are other ways, but they have simply not been brought forward for serious consideration.

The call for free rent is often pitched as the haves versus the have-nots. However, in too many cases it would actually be the have-nots versus the have-nots. Following through on that idea is far from a solution, as all it would serve to do is transfer a tragic problem from one group of people to another and make nothing better in the long run.