Real Estate

Why Landlords Are Declining Emergency Rental Assistance Funds

Some landlords are declining the funds because of regulatory tape attached to them. Others hope to replace struggling tenants with more financially secure renters.

Earlier in March, a $1.9 trillion coronavirus relief package was passed by Congress that includes approximately $50 billion in Emergency Rental Assistance (ERA) for struggling renters and landlords.

Renters need to meet certain requirements to qualify for the emergency rental assistance, including at least one member of the household experiencing unemployment or other financial hardship as a result of the pandemic, at least one member of the household proving risk of housing insecurity, and proof that the overall household income is at or below 80 percent of the area’s median income.

Although the funds may seem like welcome relief for many, a number of landlords are actually turning down payments because of the various regulations attached. Restrictions like not being allowed to get rid of difficult tenants or having to provide government agencies or contractors with sensitive financial documents have deterred some landlords from accepting the assistance. The process also requires a decent amount of administrative work and documentation, which can be time consuming.

The aid is intended to help low-income renters pay back some or all of their missed rent for up to one year. But, some landlords’ hesitancy to accept the funds will make paying rent much more difficult for many renters.

One Houston-based nonprofit that helped facilitate COVID-19-related rental assistance said over 5,600 households that applied for assistance during 2020 had a landlords that would not accept it, according to the Wall Street Journal.

Likewise, the city of Los Angeles reported that almost 50 percent of renters who received assistance during 2020 rented from landlords who would not participate in the program.

“I’ve seen it happen more and more,” Brian Miller, an attorney at Greater Boston Legal Services, told the Journal, adding that roughly 20 percent of his current cases include a landlords who wouldn’t accept ERA funds.

Under the Treasury Department’s regulations, states and cities that distribute the funds are allowed a bit of flexibility in determining aid eligibility among renters, as well as whether or not they can receive funds for all or only part of their owed rent. Some programs will even pay aid directly to tenants if landlords refuse to participate. However, going around landlords to provide the funds hasn’t always resolved the issue because some landlords still won’t accept the money.

Aside from the red tape potentially involved in accepting the federal funds, many landlords in these instances are also considering more long-term pros and cons. The federal eviction moratorium does currently extend through the end of March, but it doesn’t require landlords to allow tenants to renew their leases. For some landlords, allowing a financially insecure tenant’s lease to expire and betting on getting a better tenant to fill their place might seem like a better option than relying on government aid.

Over the past several months, landlord groups as well as the National Association of Realtors (NAR) have actually advocated for more rental assistance, while some landlord groups and state association of Realtors filed lawsuits against the Trump administration over the eviction moratorium. But, for landlords struggling the most, the opportunity to get a tenant that’s in a more stable position may be too good to pass up.

Another factor at play is differences between local rental assistance programs and how much payment landlords can get. For instance, in Broward County, Florida, assistance programs won’t cover all of a tenant’s back rent if it’s for more than one month — they’ll only cover 60 percent.

“If you have someone who wasn’t upholding their end of the contract … you’re asking the housing provider to sign up for essentially another year of this person being in this unit unable to pay,” Amanda Gill, government affairs director for the Florida Apartment Association, told the Journal. “You’re really putting them in a really difficult position, because they have ongoing obligations.”

Email Lillian Dickerson

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