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Politics and Real Estate: The Effects of the Moratorium Extension on Property Owners

The Centers for Disease Control and Prevention (CDC) issued a moratorium on residential evictions to help prevent the spread of COVID-19 during the height of its spread in 2020.

Said moratorium was intended to allow tenants who were economically affected to defer their rental payments. It was also to keep these possible evictees out of crowded settings such as homeless shelters to help contain the spread of the virus.

Although this moratorium has since been extended four times, the latest and final extension will last only until the end of July 2021, with the distribution of rental assistance money set to continue.

As of this writing, approximately 7 million Americans are still behind on their rent payments, although rent payment collection rates rose back up to 95.6% in June, according to the National Multifamily Housing Council (NMHC).

However, for property owners, especially the small ones, the eviction moratorium has had a devastating impact.

The majority of the country’s landlords are small investors. They own about 23 million units in 17 million properties, according to the U.S. Census. More than 7 million renter households are behind on rent, also according to the Census. Therefore, landlords have next to no recourse. For example, let’s say that a landlord owns a small building with three rental units. Two of the units are trying their best not to default on their obligation, but the last one does not seem to have the same dedication. Automatically, the landlord stands to lose ⅓ of this rental income.

President Biden’s decision to grant the moratorium a final extension is going to hurt and add insult to the injury of these landlords. This will probably serve as an impetus for various real estate landlords to bring the matter to court. One can argue that the CDC’s extension infringes on the property rights of the landlords, depriving them of their right to collect just compensation on their property.

While the previous extension was upheld as constitutional, it was only by a slim margin of 5-4. This time, there’s probably a good chance that the Supreme Court will reverse their prior decision. What was constitutional before, may be declared unconstitutional now considering the worsening conditions of the landlords.

Whether the President and the CDC’s decision to grant the extension was proper and data-driven is something to be considered. However, if this is going to occur in the future, the CDC’s authority alone is not enough. A decision as significant as this should not just be done regularly and if the administration thinks that it is needed, it is probably a better route to ask Congress to create a law to formalize this setup. Otherwise, it seems a rather oppressive and highly political act and is highly discriminatory against existing landlords.

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