When the COVID-19 pandemic reached the United States a year ago, federal, state, and local governments acted swiftly to protect residential tenants with eviction moratoriums. Until recently, however, there’s been too little government support for rental assistance.
From the start, the National Association of REALTORS® has advocated for federal rental assistance, beginning with a coalition letter sent on March 19, 2020, days before passage of the first COVID-19 relief bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. That act included funding for states to help address the COVID crisis, including providing rental assistance. More than 21 states did provide some form of rental assistance, but funding was limited, and aid was often targeted to the lowest-income renters.
The CARES Act also included a 120-day eviction moratorium. The federal moratorium was extended in early September after former President Donald Trump issued an executive order, asking the Department of Health and Human Services and the Centers for Disease Control and Prevention (CDC) to consider whether the extension was warranted to stop the spread of COVID-19. The current CDC order extends the moratorium to at least March 31, 2021. In addition, property owners with federally related mortgages have been prohibited from evicting tenants, and, as of mid- February, eviction moratoriums remained in place in about a dozen states and many local areas.
NAR’s message to lawmakers, throughout the pandemic, has been that moratoriums without adequate rental assistance leave renters saddled with a growing mountain of unpaid debt. Meanwhile, housing providers who rely on rental income may be unable to pay their mortgages or maintain their properties.
Federal relief came in December 2020 in a spending bill that included $900 billion in stimulus relief. One provision allocated $25 billion in rental assistance to states and local communities with at least 200,000 people; the American Rescue Plan, passed in March 2021, appropriated an additional $21.55 billion. The program is run through the Department of the Treasury, and states and eligible localities had to apply for funds by Jan. 12, 2021. The Treasury Department distributed the first round of funds in the last week of January, and on Feb. 22, the Biden administration released updated FAQs for states to use when creating their programs, clearing the way for funds to be disbursed to eligible housing providers and renters.
Each jurisdiction can set its own program rules within the confines of the law. The law says:
- 90% of all funds received must be used for rental assistance or utility bills.
- Rental assistance can include current rent, rent in arrears, and up to three months’ future rent for a total of no more than 12 months (with some exceptions up to 15 months).
- Past due rent can be from March 2020 forward.
- Rental assistance is to be paid directly to the housing provider unless the housing provider refuses it, in which case the assistance money goes to the resident.
Eligible renters include anyone making less than 80% of local median income based on either 2020 income or current income. In addition, recipients must have qualified for unemployment assistance or experienced a reduction in income and must be at risk of housing instability. From the American Rescue Plan funds, $2.5 billion is reserved for high-need grantees, very low-income families spending more than 50% of their income on rent or living in substandard housing. Tenants may apply directly for assistance, or housing providers may apply on tenants' behalf.
Expect significant differences across states in implementation of the program. Some states may simply adjust an existing program they were offering through CARES. Others will create new programs. Most monies will be distributed by housing authorities, housing finance agencies, or community development agencies.
Meanwhile, NAR will continue to advocate for additional rental assistance money. The latest analysis by the Urban Institute indicated the need through January 2021 was closer to $60 billion in unpaid rent, so the $46.55 billion thus far allocated will not be enough. In January, President Biden extended the eviction moratorium through March 31, 2021, and further extensions are possible. NAR has encouraged states to streamline their programs for distributing rental assistance and to refrain from requirements and burdens that will slow participation. Only when all back rent is paid can renters feel relief and housing providers find stability for their properties.