Millions of tenants are behind on their rent. Absent some sort of intervention, these leaseholders face the real chance of being evicted from their homes. Due to a federal eviction moratorium, which prohibited landlords from enforcing evictions during the pandemic, many renters haven’t paid rent for months.
In many cases, tenants owe more than a year of back rent but are still in these leased properties.
Earlier this month, the Biden administration, through the Centers for Disease Control and Prevention, issued a new eviction moratorium to run through Oct. 3. This “targeted” moratorium applies to parts of the country experiencing “substantial” or “high” spread of COVID-19. This includes the vast majority of the United States.
But like the original eviction moratorium and its two extensions, this policy has two major problems.
First, it’s unlawful. Second, it will undoubtedly backfire.
From an originalist judicial perspective, these moratoria are unconstitutional. Article 1, Section 8 of the Constitution, commonly referred to as the Commerce Clause, allows for Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” By contrast, most rental agreements are exclusively intrastate commerce, not the kind of interstate commerce encompassed by Article 1, Section 8.
But suppose we set aside the question of constitutionality. By what authority can the CDC invalidate private contracts? How can it supersede property owners as to the use and enjoyment of their property?
The short answer is that the CDC doesn’t have any such authority, and for that matter, neither does Biden. One of the fundamental functions of government is to protect private property rights. These policies don’t just fail in that regard, they actively undermine those rights. The eviction moratorium is nothing short of government-sanctioned theft.
There are further problems with these policies. They will undoubtedly serve as a lesson in unintended consequences. While many individuals who missed rent payments during the pandemic faced legitimate economic hardship, economics teaches us that people respond to incentives. While these moratoria don’t offer tenants a free lunch (they still owe back rent), they do allow people a temporarily “free” place to live — and those places belong to someone else.
Landlords have been all but neglected in these discussions. While the moratoria may have paused evictions, it hasn’t paused mortgage payments, property taxes, insurance premiums, or upkeep costs for property owners. Although people are quick to demonize landlords as cruel and obscenely wealthy conglomerates, this is far from the reality. Some 22.7 million rental units are owned by individuals. About half of all landlords are in this “mom-and-pop” category, meaning they own only one or two rental properties. One-third of these landlords come from low-to moderate-income households. It’s easy to see how this could lead to financial ruin for many property owners.
The amount owed to landlords is not small. A recent federal lawsuit claims that landlords are out $26.6 billion due to the moratoria. Making matters worse, that figure assumes the almost $47 billion in federal funds allocated for rent relief actually makes it to renters and, eventually, their landlords. So far, only $3 billion has made it out the door.
Unable to make mortgage payments, many landlords will likely lose their properties, thus exacerbating an existing national housing shortage. In the future, landlords leery of finding themselves in another situation where they cannot evict a nonpaying renter may decide to forgo renting their property. Those who do decide to rent will meticulously screen rental applicants, require higher rents and higher deposits. Tenants with poor rental histories or without cash reserves will be out of luck. The most disadvantaged among us will lose the most.
So what is to be done?
There are no easy answers. One option is to allow renters and landlords to make their own arrangements. Evictions are time consuming, costly, and put property at risk. Landlords want to avoid them, and many are willing to work with their current tenants on payment plans. The quickest way to correct this problem, however, is by getting people back to work. This current policy promotes the opposite.
Joshua Crawford is the executive director of the Pegasus Institute, a public policy think tank in Louisville, Kentucky.
Abigail R Hall is an associate professor of economics at Bellarmine University, a senior fellow at the Pegasus Institute, and a Young Voices contributor.
