Canceling rent will initially cause landlords to fail. This will have a cascading impact on municipal budgets and local economies as contractors and vendors aren’t paid or given work. Banks will suffer, but they’ll probably get bailed out again.
Ultimately it will be the tenants who pay the greatest price as rents will increase dramatically due both to attempts by owners to cover the added debt they accumulated and the reduction in available rental housing.
At the lower end of the housing market expect to see abandonment that leads to buildings being razed. At the mid market expect that well financed Wall Street corporations will buy up much of the housing stock. 2021 will make 2008 look like a small trial run.
Don’t expect to see much new residential rental construction. Why would smart people invest in something the government can take away, without compensation, with the stroke of a pen.
Or of course, the Feds could do what is right and create a nationwide housing voucher that would protect both tenants and housing, as well as preventing the further collapse of the economy.
Demand a fix
The National Multifamily Housing Council has a similar tool to reach out to your elected officials.
But don’t stop there.
Even though most of the funding, if it comes, will be Federal, reach out to your local officials as well. Not only may they find state and local funding, many of these folks have the ear of the national political party bosses. (It the national parties had leadership, the problems of not being able to pay rent would have been solved decades ago. – Just sayin’)
Why ‘Cancel-Rent’ Hasn’t Worked in The City That Tried It | Time
https://time.com/5889749/cancel-rent-ithaca/
While largely sympathetic to renters, who make up 73% of Ithaca’s residents, several members of the council worried about the well-being of small landlords as well. What happens to the landlords who still have mortgages to pay? What happens to contractors who are employed by those landlords? What happens to the city’s budget, which relies on those landlords paying their property taxes? “I don’t understand why we would want to take the pain and economic hardship of one group of our citizens and put it on another group of our citizens,” Ithaca Alderman George McGonigal said at the meeting. “We may create a bunch of problems for everybody in the community, including ourselves.”
Myrick saw the flaws, too. He too worried about Ithaca’s smaller landlords, in addition to the city’s already meager budget. “If you just cancel rent, there will be some landlords that lose money, there’ll be some landlords that lose so much money they can’t make their mortgage or tax payments, which could lead to defaults, and tax foreclosures would lead to less revenue for the city, which would mean we could support fewer social services,” he says. “This kind of thing can trigger [an economic] depression.”
Ultimately, after 30-plus minutes of contentious debate on June 3, the rent cancellation measure passed, on a 6 to 4 vote. The Ithaca Tenants Union, which coordinated with a couple city council members and Myrick to conceptualize the order, celebrated. “When your business is in providing people housing, that’s a certain responsibility you take on if it goes under to not put people on the street,” says Ary Stewart, a 24-year-old member of the renters coalition. If this results in landlords falling behind on their own debts, Stewart says they should “take it up with the bank.”
