What Does The New Stimulus Bill Mean for Landlords

Article Updated March 11th, 2021

The pandemic has gone on longer than anyone predicted with wide-reaching economic consequences. One of the central issues of debate over this time has been how the government can best support those individuals at risk of eviction because of COVID-19. And a primary policy has been the eviction moratorium which has been extended several times.

The eviction moratorium aimed to protect vulnerable individuals and prevent the spread of COVID-19 which has so far killed over 500,000 Americans. However, this has placed a disproportionate financial strain on landlords and has been challenged in several courts across the US.

The debate on stimulus action continued on into 2021. It became one of the primary focuses for Biden’s first 100 days. Finally, it seems the stimulus bill has been passed by the Senate.

The American Rescue Plan (ARP), as it has been called, is President Biden’s new $1.9 trillion stimulus package. This package aims to tackle the growing issue of rent arrears, forgone evictions, and the mounting debt of tenants and landlords. The bill was signed into action by President Biden on Thursday the 11th of March, which designates $25 billion for rent assistance and $5 billion for assisting with utilities.

In this article, we take a look at some of the key points of the new stimulus bill and what this bill could mean for you as a landlord.

Stimulus Check

As part of the original stimulus bill, $1200 was given to every American. This broad-sweeping stimulus check did a lot to help many of the worst impacted as unemployment skyrocketed.

The American Rescue Plan bill designates approximately $400 billion to go to direct payments to individuals. The third stimulus check for Americans is set to be $1400 and will be issued to individuals with incomes of less than $80,000 or married couples with joint incomes of no more than $160,000.

This should go a long way to help many of the most vulnerable and is an indirect blessing for landlords who can have some confidence restored that their tenants can at least cover the rent for the next couple of months.

Extended Unemployment

As part of this new stimulus bill, the additional $300 unemployment will continue through to September of 2021. This benefit also extends who can qualify for unemployment benefits to include many who wouldn’t traditionally qualify such as self-employed and part-time workers.

This benefit paired with the prior should alleviate many lower-income households’ immediate financial problems and help many catch up or continue with their rent payments with relative confidence.

One thing to note, however, is that unemployment benefits are in fact taxable income, a fact which caught many individuals by surprise and could soak up portions of the new stimulus checks.

Rent Relief

The legislation provides $25 Billion in funding for the Treasury Department to create an Emergency Renter Assistance Program. This will be distributed to state and local grantees to administer the program and distribute assistance, so it will take some time to reach individual property owners. Cities with populations greater than 200,000 can receive funds directly for distribution.

Renter assistance includes up to 12 months total rent and utility payments, with additional 3 months if necessary (assuming program funds are still available).

There is an application process for the renter – but the landlord can help a tenant apply if needed. When approved, funds are paid directly to the property owner. If the rental property owner declines assistance, funds are paid directly to the tenant to make rental payments. Applying for or on behalf of a tenant requires their consent.

Tenants may be able to qualify and gain additional rent relief if they meet any of the following criteria:

• One or more members of the household qualified for unemployment benefits experienced a reduction in income or experienced other financial hardship due to the pandemic.
• They have a household income of no more than 80% of the area’s median income per household.
• Have one or more household members who can demonstrate the risk of homelessness or housing instability; and
• They can demonstrate a risk of housing instability by presenting a past-due utility bill, past-due rent notice, or eviction notice.

States and cities receiving funds to provide rental assistance have been instructed to prioritize the following applications:

• Household income does not exceed 50% of the area median income per household
• One or more members of the household are unemployed and have been unemployed for 90 days prior to applying for assistance.

In most cases, funds granted to renters will be paid to their landlord or utility company directly by the state or city managing the money.

Eviction Moratoriums

The stimulus plan does not include an extension of the current eviction moratorium which is due to end March 31st, 2021.

As with past moratoriums, the current extension to March 31 protects tenants from eviction for nonpayment of rent only. If tenants owe back rent, nothing in this or past legislation forgives the debts, it just protects you from receiving an eviction notice.

You’ll also need to meet certain conditions in order to qualify for protection, such as falling below the $99,000 annual income threshold and making a good-faith effort to pay at least partial rent.

“This Order does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar contract,” reads the notice published in the Federal Register when the moratorium was established in September. “Nothing in this Order precludes the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent or other housing payment on a timely basis, under the terms of any applicable contract.”

As such, it’s essential to communicate to tenants that rent is still due despite eviction moratoriums. Additionally, when you can, it’s advised to help tenants explore the rental assistance options available to them as part of the new stimulus bill.

Mortgage Moratoriums

The Biden administration has extended again the foreclosure moratorium for homeowners to June 30, 2021;

• Extend the mortgage payment forbearance enrollment window until June 30, 2021, for borrowers who wish to request forbearance;
• Provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.

What’s Changed for Landlords?

The most important thing for landlords to know about is the additional financial support for lower-income families, especially those directly affected by the pandemic with the additional rental assistance funding. This will undoubtedly play an integral role in preventing evictions through 2021.

As such, it’s well worth exploring local and state rent relief options and informing your tenants should they need it. This could allow an avenue to pursue current overdue rent as well as ensure on-time rent payments in the future.