The 1st Of The Month Is Coming Amid A Pandemic. What If You Can't Pay Rent?
AILSA CHANG, HOST:
Tomorrow is the first day of April, which, for a lot of people, means rent day. Tens of millions of people in America rent their homes. But mass layoffs mean no paycheck for many, and no paycheck means no rent. And when it comes to commercial rent, restaurants and other retailers have seen their revenues effectively frozen. Henry Grabar has been looking into what that means for renters and landlords. He's a staff writer for Slate and joins us now.
HENRY GRABAR: Thanks for having me.
CHANG: So I want to start with the big question. Do we have any idea what's going to be happening tomorrow?
GRABAR: No, we have no idea. We know that there are 44 million renter households in the United States. They owe something between $20 billion and $40 billion in rent. There's at least that much owed in commercial rents, including restaurants, retail and offices. And we have no idea who's going to pay.
CHANG: We don't know if most people are going to pay, minority people will pay, et cetera.
GRABAR: We have to assume that most people still have the money to pay rent because most people still have jobs. But we also know that we've seen a wave of layoffs that has just broken every previous record since we've been keeping track. And in particular, workers in the service sector who might have been more vulnerable to economic shocks in the first place may not have the money to pay rent.
CHANG: Well, last week, we saw the federal government pass this $2 trillion economic relief bill. What does that do specifically for renters?
GRABAR: Well, there's two things in there. There's - first of all, there's the cash payments, right? We know that every American making under a certain amount of money is going to be getting a $1,200 check in the mail. Unemployment insurance has been fortified. So there is money on the way, but it's not here yet. The other thing the stimulus bill does is it protects many tenants from eviction, although it's not clear who - which tenants are covered by that. It depends on the kind of mortgage.
CHANG: OK. So it prevents landlords with certain types of mortgages from evicting tenants. How do you know what type of loan your landlord has?
GRABAR: So that's a great question. I don't know how tenants are going to be able to access that information. And that speaks to the general lack of preparation on the part of politicians for what residential tenants are supposed to do if they're not able to pay their rent. There is basically a patchwork of laws set up across cities and states, including this federal bill, that offers some degree of protection from evictions, but it's not always clear whether you are going to be covered or not.
CHANG: So is there any recourse if you think you're getting wrongfully evicted in the next couple months?
GRABAR: Well, many states and cities have paused evictions. So the hope is that in places like New York and San Francisco and Chicago and Philadelphia that have been shut down now for days, if not weeks, because of the coronavirus that there will be no evictions on April 1. The eviction courts are closed. What this doesn't do is it doesn't propose any kind of repayment plan, let alone forgiveness. And so the question is let's say these government checks arrive in two months. Is that going to be enough money to cover the back rent? What if it's not enough money to cover the back rent? What do tenants do then? Do we see a wave of evictions when July 1 comes around?
CHANG: OK. We've been talking a lot about housing so far, but how is this dilemma playing out in commercial real estate?
GRABAR: Well, so far, one of the funny things about this is that the April rent strike has basically been led by venerable left-wing institutions like Subway sandwiches and The Cheesecake Factory, each of which has said that they may or will not pay rent this coming month. Now, commercial landlords are in a funny place because they may be uniquely exposed to this. They may also be thinking that if we are entering a major recession where businesses don't come back overnight, then it might be better to take a haircut in the short term and have tenants in the long term than try and get everybody out now and get stuck with a bunch of empty storefronts for months and months.
CHANG: OK. So it looks like there's a lot that we don't know about what's going to be happening in the next few months. But what should be happening right now to mitigate these issues, issues like perhaps some people not being able to pay rent for months to come?
GRABAR: I think the best hope is that you get progressive legislators at the city and state level who basically agree to pass some sort of rent forgiveness bill. And it says if you've been severely affected and your income has been severely curtailed by the coronavirus, then you don't have to pay rent. Now, of course, that pushes the problem up the food chain a little bit. But at the very least, then the dispute becomes one between landlords and banks rather than between tenants and landlords. And I think that that is probably the best solution in the long run because we can keep people in their homes. And the most important thing here is to avoid a mass eviction and homelessness crisis at the end of this.
CHANG: Henry Grabar is a staff writer for Slate.
Thank you very much for joining us today.
GRABAR: My pleasure.
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