Rent crisis in New York City only tip of the iceberg

Demonstrators hold May Day protests in Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York
It isn’t enough to just “cancel the rent.” Both tenants and landlords in New York City need financial help to sustain themselves while also preventing the city’s economy from collapsing even further. (REUTERS/Mike Segar)

From the beginning of the coronavirus crisis, there has been a persistent call to “cancel rent” in New York state and provide a much-needed break to cash-strapped, out-of-work New Yorkers. That call has been kept on infinite hold.

Back in March, Governor Andrew Cuomo enacted via executive order a moratorium on eviction proceedings, guaranteeing that landlords cannot boot their tenants for nonpayment of rent due to the pandemic.

On May 7, he announced an extension of the moratorium through August, and also cleared the way for landlords to use security deposit payments in lieu of rental payments. 

But these are not long-term solutions for the turmoil at hand.

The rent is still due for thousands of tenants whether they can afford to pay it. If you lost your job in March, have just enough for the necessities but not enough for your $2,000 monthly apartment rent, you’re now on the hook for April and May rent, at $4,000.

Factor in missed payments for June, July and August, and by the time the moratorium ends, you would wind up owing your landlord $10,000 in back rent.

That’s unfair not only to the tenant, but also the landlord. 

It’s easy to think of every landlord as a faceless, multi-million dollar corporation, but the truth is there are plenty of landlords who live below their tenants and count on rental income to pay their own mortgages.

If they can’t afford their mortgages, the banks will foreclose. Resulting short sales and foreclosure auctions will drive down the value of their buildings, and that will have a ripple effect on the entire real estate market.

Does that matter? Yes, because the city assesses property taxes based on property values. Decreased values lead to decreased property tax revenue, which will compound the already staggering $9 billion budget gap at City Hall.

We’ve got a financial disaster on our hands — one that, combined with the current fiscal situation, may drive New York City back to the near-bankruptcy era of the 1970s if we’re not careful. 

So it isn’t enough to just “cancel rent.” 

Tenants need cash to pay their rents; landlords need their cash to pay their mortgages. If the government can’t provide that in the interim, New York City will be in even deeper trouble.

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