Impact of Covid-19 on rent and eviction

With the rampant spread of Covid-19, many Americans are unable to pay their rents and this impacts the landlord's ability to pay mortgage. We discuss CARES Act for each state.

This pandemic has been a stressful few months for everyone, with people getting sick and losing their loved ones to COVID-19. To add to this, many companies have been downsizing, as markets and malls have been shut down, and business is slow. Along with downsizing, companies have been letting go of their employees. This is because they may not have the money anymore to pay the salaries of so many employees. Of course, from a business point of view, this is understandable and may even be a smart thing to do. However, this has negatively impacted many people, who are now all of a sudden left without a job and a source of income, being forced to dip into their savings for the bare minimum such as buying groceries and paying bills.

It feels as if COVID-19 has completely stopped time, or at least slowed it down. Business is slow for everyone, even those who still have jobs. In this article, we will look at the impact COVID-19 has had on paying rent, eviction from rented houses, and the laws that govern these in the United States.

Losing your job(s) or slow business means you are not earning as much as you were before. For many people, this makes it very hard to make ends meet – this is the case for millions of Americans. The unemployment rate is hovering around 7% at the time of this writing. According to a recent study, the average American’s savings is $3,500. The average monthly rent in the US for apartments is $1,463. With the cost of living expenses, many people cannot afford to pay their rents shortly after losing their jobs. When renters cannot pay their rent, eviction follows. However, we are going through a pandemic with wide implications for everyone.

As a landlord who relies on the rental income to cover mortgage and expenses, rent is important to make their ends meet. Without the rental income, landlords could potentially lose their houses. The struggles of the renters to pay rent has put many landlords in a difficult position of being empathetic to the needs of the renter and at the same time protecting their hard-earned investment properties. To offer buffer coverage, many mortgage lenders are offering mortgage forbearance or deferment to homeowners. This deferment will be reported to the credit bureau under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which does not impact the credit score of the landlord. However, it impacts the ability of the landlord to refinance the property for a year. In addition to that, they still have to pay the accrued mortgage. While the renter is still responsible for the accrued rent to the landlord, many renters struggle with affording several months’ rent even without Covid-19. The landlord does not have to repay the deferred mortgage in lumpsum.

Eviction due to the inability to pay complete rent on time was so widespread, that the National Low Income Housing Coalition announced in August that around 20-40 million Americans would be faced with eviction in the months to follow. The National Low Income Housing Coalition or NLIHC for short is a group that advocates for just public policy regarding low-income households in the United States so that people who do not earn a lot of money can live comfortable and decent lives.

Taking into account how many people were being forced out of their homes for not being able to pay rent as the economy crashed, the President of the United States announced that there would be a temporary ban on evictions in the United States, starting from September 1st. This ban would last the entire rest of the year. This was done after the Centers for Disease Control and Prevention stated that implementing the order was an “emergency action”.

Who does this government-issued order apply to?

  • To be eligible, you must prove that you have done anything and everything in your power to obtain government assistance to pay your rent.
  • You must also prove you will earn less than $99,000 in the complete year of 2020, or $198,000 if you are married, and fill out joint tax returns.
  • Thirdly, you must be experiencing a considerable loss in income for the household or having to pay a very high amount of money in medical bills.
  • The fourth eligibility criterion is that you must be trying your best to pay the rent, or at least make timely payments even if they are not the complete rent.
  • Lastly, if eviction would put you and your family at risk of coming into contact with people who have COVID-19 (in a situation where you have to live in a place like a group home), or if eviction would mean you and your family become homeless or have to move to a more expensive area, your landlord cannot legally evict you.

The problems with the eligibility criteria

The main challenge with these criteria is that they are all very subjective. It says the renter must have tried their hardest to pay the rent, or done everything they possibly could to get government assistance to pay it. Thus, this can be interpreted by the landlord in any way they want. They could simply state that the renter is not eligible and they are not covered under this order, and forcibly evict them. The tenant will have to leave the premises. The best the renter can do is to fight it out in court, which will take time and money. Thus going to court is not a feasible option for someone who is barely making ends meet as it is. In the courtroom, it is up to the housing judge whether you, as the renter, are eligible to stay in the rented premises, or the landlord can evict you. The landlord can still evict the renter for reasons other than the non-payment of rent. These include any criminal activity or destruction of property.

The ban on evictions and utility shut-offs if one cannot pay rent on time does not apply to all 50 states of America though. We shed some light on each state with the following breakdown:

  • In Alabama, the Governor’s order expired June 1, 2020, and thus landlords can evict tenants who are not paying rent on time.
  • Alaska’s eviction ban expired on June 30th and the utility shut off ban expired on November 15th.
  • Arizona’s eviction ban expired on October 31st, and its utility ban has also expired, but many companies will still provide you with their services even if you cannot pay for the time being. For this, you will have to check with each company you use the services of.
  • There is no ban on evictions in Arkansas, but there is a ban on utility shut off.
  • In California, there is a cap on rent increases, among other price controls. This was done because most people, even landlords, are struggling to make as much as they used to, pre-pandemic. So, landlords started increasing their rent prices as a tactic to earn more. Governor Gavin Newsom stated this was not acceptable in a state of emergency, aka the pandemic. Governor Newsom also signed AB 3088, which has banned the evictions of tenants who cannot pay rent due to hardships as a result of COVID-19. This ban will stay in place till February 1st, 2021. However, the ban states that if this hardship in payment occurs between September 1st, 2020, and January 31st, 2021, tenants must pay at least 25% of rent to avoid eviction. California also has a ban on utility shut off due to non-payment.
  • Colorado has no moratorium on utility shut off but they do have a ban on evictions until December 20th, 2020. However, it is not a complete ban. If the landlord wants to evict the tenant, they must provide them with a 30-day notice.
  • Denver has no ban on evictions, as it expired in July.
  • The governor of Connecticut has ordered that there will be no evictions till January 1st, 2021, due to non-payment of rent because of issues arisen from the pandemic. The moratorium on utility shut off has been extended to May 1st, 2021.
  • In Delaware, landlords can still evict tenants by sending them notice, but the police department cannot physically remove them from the premises. Landlords are also not allowed to charge late fees. There is also a utility shut off ban for customers who are struggling due to the pandemic.
  • In the District of Columbia, evictions for tenants who are in a state of emergency has been banned. Utility shut offs have also been banned.
  • There is no eviction ban on Florida, as it expired on October 1st, 2020. There is also no ban on utility shut offs, but providers have said they will not shut off services.
  • Georgia also does not have any bans on evictions or utility shut offs.
  • Idaho does not have any bans on evictions or utility shut offs.
  • Illinois has a ban on evictions till December 12th, 2020. Illinois’ major utility providers have agreed not to shut off utilities till March 31st, 2021.
  • Indiana does not have any bans on evictions or utility shut offs for the time being. Their eviction ban expired on August 14th, 2020.
  • Iowa does not have any bans on evictions or utility shut offs.
  • Kansas has a ban on evictions till January 26th, 2021, but not one on utility shut offs.
  • Kentucky had a ban on evictions till August 25th, 2020. It has now expired, and they do not have a ban on utility shut offs either. However, many providers have agreed not to shut off utilities for people who cannot pay due to the pandemic.
  • Louisiana does not have any bans on evictions or utility shut offs.
  • Maine’s ban on eviction expired August 3rd, 2020, and the utility shut off ban ended November 1st, 2020.
  • Maryland does not have a ban on evictions and their utility shut off ban has also expired.
  • Massachusetts’ ban on evictions expired on October 17th, 2020, however, Boston’s mayor has extended the eviction ban for the city till the end of 2020.
  • Michigan has no ban on evictions or utility shut offs, but providers have stated they will assist people who cannot pay due to the pandemic.
  • The ban in Minnesota on evictions goes on until December 14th, 2020.
  • Evictions were legally resumed in Mississippi on June 1st, 2020. They also have no ban on utility shut off.
  • Missouri does not have any bans on evictions or utility shut offs.
  • Montana has no ban on utility shut offs. There will, however, be no termination or eviction for those who meet the criteria listed above.
  • Nebraska does not have any bans on evictions or utility shut offs.
  • Nevada does not have any bans on evictions or utility shut offs.
  • New Hampshire does not have any bans on evictions or utility shut offs.
  • New Jersey has a ban on evictions till January 25th, 2021, and a ban on utility shut offs till March 15th, 2021.
  • New Mexico has a limited ban on evictions but no ban on utility shut offs.
  • New York has a ban on evictions till January 1st, 2021, and a ban on utility shut offs till whenever the state of emergency continues +180 days after that.
  • North Carolina does not have any bans on evictions or utility shut offs.
  • North Dakota does not have any bans on evictions or utility shut offs.
  • Ohio does not have any bans on evictions or utility shut offs.
  • Oklahoma does not have any bans on evictions or utility shut offs.
  • Oregon has a ban on evictions till December 31st, 2020, but no ban on utility shut offs.
  • Pennsylvania does not have any bans on evictions or utility shut offs.
  • Rhode Island does not have any bans on evictions or utility shut offs.
  • South Carolina does not have any bans on evictions or utility shut offs.
  • South Dakota does not have any bans on evictions or utility shut offs.
  • Tennessee does not have any bans on evictions or utility shut offs.
  • Texas does not have any bans on evictions or utility shut offs.
  • Utah does not have any bans on evictions or utility shut offs.
  • Vermont has a ban on evictions till the state of emergency ends +30 days, but no ban on utility shut offs.
  • Virginia does not have any bans on evictions or utility shut offs.
  • Washington has a ban on evictions till December 31st, 2020, and a ban on utility shut offs till April 30th, 2021.
  • West Virginia does not have any bans on evictions or utility shut offs.
  • Wisconsin does not have any bans on evictions but they do have a ban on utility shut offs till April 15th, 2021.
  • Wyoming does not have any bans on evictions or utility shut offs.

Check the above list to find your local state, so that you are prepared in case of any emergency situation, such as eviction. In addition to the state-level guidelines, every county and city has local programs in place. Some counties offer emergency rental assistance program. Some cities offer additional support including for homeless people. Neither the renter nor the landlord wants to be in this difficult conundrum. With well over 13 million people impacted, the Covid-19 pandemic is very real and very dangerous. It continues to shape our lives every single day, which is why we need to be prepared beforehand.

At HomeKasa, we take your safety seriously. Read our tips on how to repair rental properties during Covid-19. Whether you are a renter or a landlord, HomeKasa offers free property management software to help you manage your home. Store your lease agreement, moving checklists, etc online for free and access them anytime from anywhere. Get started now.

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