As a result of the recent pandemic, legislation has been passed on a multitude of levels to protect tenants facing financial difficulties from being evicted. This includes legislation passed at the federal, state, county, and city levels, all geared towards implementing a moratorium on evictions. The hope was to keep people safe in their homes during stay-at-home orders, as well as protect those who have faced financial loss as a result of the spreading virus. These legislations were passed over three months ago, and some are set to expire soon – However, at a time when there are still millions out of work, and hundreds of new cases reported each day, how will our communities respond when the eviction ban lifts?
What Current Legislation is Impacting Santa Cruz County?
Depending on the city that someone resides, the impact of the legislation can vary. As mentioned, legislation has been passed on various levels, and the expiration of the moratorium may differ from one area to the next. Here are the important facts for residents of Santa Cruz County:
Federal: Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, landlords with federally backed (Fannie Mae, Freddie Mac or HUD) mortgages or who participate in federally assisted rental housing programs, are not approved to start the eviction process or collect fees or penalties from tenants based on non-payment of rent – This moratorium is set to expire July 24th.
California: In March 2020, California Governor Newsom signed an executive order establishing a statewide moratorium on evictions. “The order prohibits landlords from evicting tenants for nonpayment of rent and prohibits enforcement of evictions by law enforcement or courts. It also requires tenants to declare in writing, no more than seven days after the rent comes due, that the tenant cannot pay all or part of their rent due to COVID-19.” This was set to expire on May 31st, but was extended now through September 30th.
Santa Cruz County: On March 24th the Santa Cruz County Board of supervisors unanimously passed a moratorium on residential and commercial evictions. However, this ended on May 31, 2020.
Now, what will happen if the ban lifts?
The impact of the moratorium has been witnessed by both landlords and tenants. For landlords, many are facing challenges with paying their mortgages as a result of the restrictions. For tenants however, they have been provided a sense of security during these challenging times. So, in the controversial time that we are living, what is going to happen to both parties when the bans are lifted?
- Mass Evictions. The most obvious impact of this lift will be mass evictions. For the millions of Americans who are still out of work, they may be facing eviction when the bans lift. Their only protection thus far has been government ordinances, but with these coming to an end, tenants are anxious about their futures. According to CNBC, almost half of renters between the ages of 18 and 64 are having difficulty making rent payments. They have found safety in the federal $600 addition to their unemployment; but, with this expected to expire July 31st, many individuals will face even more severe economic uncertainty.
- As a consequence of the mass evictions, we will witness an influx in homelessness. As unemployment remains high, individuals are challenged with finding work to support their families. As a result, families, including children, will be without shelter. To put it in perspective, it is estimated that 365,000 households in Los Angeles will be put out of a home, including 558,000 children. Unless they are educated on the process following the evictions, local shelters will need to be prepared for an influx in residents.
- High vacancy and reduced rents. With people unable to pay rent, tenants will move out and landlords will be left with vacant units. The high vacancy rates will likely result in rent reductions by landlords. This is simple supply and demand – As tenants cannot afford to pay high rents, demand for units will decline. Landlords will need to reduce their rents to attract new tenants. However, turnover for a landlord can be expensive, and their best option may be to work with their current tenant and offer a reduced rent while the tenant repays any losses.
- People will move to accommodate their new lifestyle. It is no secret that many Americans live above their means. It is estimated that more than 40 percent of California households pay more than 30 percent of their household income on rent, and more than 20 percent spend more than half of their income toward housing expenses. Therefore, if tenants are evicted, many will be forced to move to locations where their rent to income ratio is more manageable.
Some agencies are even promoting the concept of converting unused or abandoned commercial space into affordable housing to accommodate this shift. Richard Rubin, the founder of affordable housing company Repvblik, reports this may be the best solution for the mass evictions we could face.
- Increase in court cases. In early April the California Judicial Council issued an emergency rule suspending eviction actions. The ruling applies to any summons on a complaint for eviction unless the court finds that the action is necessary to protect public health and safety; this rule is in effect until 90 days after the governor lifts the state of emergency or the Judicial Council amends or repeals the rule. Although this is not directly in line with the ban on evictions, there is no certainty the California Judicial Council will not respond if the landlords feel threatened by the discrepancy in the policies.
The reality is that the financial challenges Americans face as a result of the pandemic will be present for months to come. Although the eviction ban has created a brief sense of security for tenants, the lift of the ban is going to bring a new round of difficulty for both tenants and landlords alike. Unless there is a move on the federal level that assists both tenants out of work and landlords unable to pay their property expenses, the consequences are inevitable. Hopefully, there will be a solution in our near future that will help all parties during these trying times.