Governor Andrew Cuomo has extended for another two months his original 90-day order suspending evictions in New York state for failure to pay rent.
Cuomo said that landlords who face utility bills and mortgages can turn to banks and federal programming for help.
He also said that officials will ban any late-payment fees and allow renters to use their security deposits as payment.
“Everyone is just making do, and everyone has hardships,” he said during his daily briefing Thursday. “We just want to make sure the people who are most vulnerable are protected.”
There’s more at the link.
This is very useful to those who’ve been laid off or furloughed. They’ll at least have roofs over their heads for the next few months, while they figure out how to make a living. However, it doesn’t excuse them from actually paying the rent they owe. If they don’t pay for five months, until August 20th, and then expect to go on as before, they’re in for a big surprise. I’m sure landlords will be applying for eviction orders as soon as they’re legally able to do so, and kicking out those who haven’t paid, and suing them for rent arrears.
Landlords are in a terrible position over this. They’ll be portrayed as evil and mean and greedy for insisting on payment: yet they have to pay mortgages on their properties, and insurance, and rates and taxes, and pay for repairs when necessary. Without rents coming in, how can they do that?
I’m not a landlord, but I know several small investors who rent out property as retirement income. One of them owns an apartment block with 36 units (not in New York state, but the same principle applies). His tenants (many of them still working) have gotten together and sent him a round-robin letter, telling him flatly that they’re going on “rent strike” until the crisis is over (even though many of them are still working and able to pay). The rent they pay is his only retirement income apart from Social Security. What’s he to do now? He can’t sue them or apply for eviction orders, because local courts are closed during the coronavirus pandemic shutdown. His bank will insist on payment of his mortgage, under threat of foreclosure; and the city will want its rates and taxes, or they’ll suspend his license to do business. Talk about being between a rock and a hard place!
It’s all very well for Governor Cuomo to tell landlords to “turn to banks and federal programming for help”. Banks may not be interested in helping: they want their money too. Federal programming is not always available – many who’ve applied for small business loans have heard nothing so far, or have been turned down. However, landlords are a relatively small class of voters. Those who rent from them are a much larger class. Therefore, the politicians will pander to those with the greatest number of votes. Others are left holding the short end of the stick.
I think we may see a wave of landlord bankruptcies in the not too distant future, as banks and others foreclose on their properties. That’ll be a very strong disincentive to others to invest in rental property in future, for fear of the consequences if anything goes wrong. Over time, that’s likely to prove very negative for the rental property market as a whole, diminishing the supply of housing units and driving up costs for everyone. I wonder if Governor Cuomo bothered to think about that before issuing his edict?