It's ridiculous that we couldn't coordinate a rent/mortgage forgiveness plan alongside all the customer bans put in place across the country. If a restaurant can't stay open, they shouldn't pay rent. If the property owner isn't getting rent, they shouldn't have to pay mortgage. And so on, up the entire chain.
I think rent should be a pretty easy one to sort out. Rent basically goes 3 places: landlord, landlord profit, and paying mortgages. The first is solved through broad income supports, the second can be eliminated for the duration, and the third can be postponed by just extending the mortgage. That requires coordinated government intervention, of course, but it's not impossible.
If landlords don't have to pay for themselves, furloughed staff, or rent, keeping a business in suspension seems much more doable.
Providing space for rent, especially to restaurants, is a gamble already in normal times. So one could argue that missing payments is part of the natural risk property owners have to bear.
On the other hand one could argue, that a government has to pay damages for business lost if they implement regulation shutting down that business.
At least, that is something that is part of modern international trade agreements. I know I shortened the argument here.
What I am trying to get to is the fact that there are no easy answers and that potential solutions will necessarily be colored by political leaning. This is a situation that is new and not solved with an easy fix.
And I addressed the two parties in that particular chain that don't have access to the central bank's reserves (rent and mortgage holding landlord). Landlords that don't hold mortgages don't need anywhere near as much assistance.
In particular, the conflict I mentioned in the last sentence was directly alluding to the problem of only giving a rent holiday without a mortgage holiday to go with it. It's actually kind of hard to believe you read my really short post in its entirety, because you're arguing quite a strawperson here.
For banks or lenders that don't have direct access to the central bank's reserves they will need to sort that out between themselves or possibly with further legislation, but it's a much much easier problem to solve than individual renters going insolvent en masse because their landlord is still demanding rent while they can't leave the house.
This is the problem with everybody being leveraged to the hilt.
I suspect some small fraction of property owners, however, are unleveraged, absentee, and likely willing to grant rent forbearance for quite awhile. For example, older people holding onto real estate for their children, or who simply really like their tenant and are committed to the community. Restaurants lucky enough to have such landlords, or similarly situated landlord-restaurateurs, are probably counting their blessings right now.
We wouldn't have a very dynamic economy if everybody operated this way, but at least there's some heterogeneity to help us bootstrap things. No comfort for the huge number of people who have effectively lost their life savings, though.
Because if every landlord took that approach now they would be sitting around in 3 months time saying they need loan abolishment and/or bailouts because they suddenly have next to no income.
I've been thinking about this a lot lately, starting with the public outcry from Airbnb hosts who have had their bookings cancelled.
And then, Cheesecake Factory announced it would not pay April 1 rent on any of its locations.
The economic fallout of this situation is something we will all bear the brunt of. Landlords are not shielded from it. I'm not saying everyone should stop paying rent, but the fact of the matter is, if people and businesses are not making money for months on end, many of them will have no choice but to stop paying.
It is unconscionable that someone thought to turn this into a blacklist which many of the unlucky millions who have recently lost their jobs will end up on.
I think that even if this were about renters and not landlords that would never happen due to being so much harder to measure. Investigating who really struggled and who was fine or who gamed the system and who really couldn't pay would probably end up costing more than it was supposed to save people even ignoring how it's paid for out of federal debt if I'm reading the article right.
All that said I think if any state really wanted to help renters they'd make real renting illegal and mandate all the contracts change to lease agreements. Nobody likes to pay their landlord's mortgage, that's not fair whether you made rent payments a priority or not. But seeing as big landowners and politicians always seem to be buddies that's about as likely as as what you originally proposed so I digress.
You let tenants stop paying then landlords cant pay their mortgages. If you let landlords stop paying then banks run out of money. If banks shut down then people lose their bank accounts and must wait for their insurance claim. It would be better to fix the problem at the root and let government cover rent instead of pretending that a bailout can be avoided. You can't prevent a bailout by sweeping the problem under the rug.
I don't want my tax money used to bail out landlords. Let the lenders foreclose. If the landlords didn't want to deal with loans then they should have paid cash for the properties.
I totally get your point, but if an established tenant with a previously successful business cannot afford rent, then who could?
It seems more like “well nobody is going to be able to rent it anyways, so we might as well keep the businesses alive so that recovery can happen”. If those 90% of businesses all went under, then there would be nobody left to pay any rent even after a recovery starts to happen. Creating a law that advantages the renters prevents the landlords from screwing each other, and the entire market, by putting the companies out of business. Those companies need to survive so that the market can bounce back more quickly. And the landlords would get screwed either way.
I do also think that mortgages should be paused, but that’s secondary in importance, in my opinion. Sorry you got downvoted, I think your opinion is also valid, and this does really suck for landlords too.
I think it would make sense that if businesses are told to close then to tell the landlords that rent payments will also stop. It seems pretty fair. Same for people whole have lost their job. You could also suspend rent payments for them. This may cause pain to the landlords but it seems fair to share the pain.
We need to abolish landlords. If you want a profit open a business.
Im tired of seeing 'poor landlords arent making profits' comments.
And 'Support local businesses' everywhere. Why? Are they taking care of their workers? Are they paying them better for taking risks during the pandemic? Probably not. Restaurant/fast food chains still open are making a killing with a leaner workforce and collecting far more money, but no workers got a raise ir even sick leave.
Are they helping their communities? No. But at least they serve a purpose. Paying rent every month instead of to a mortgage to build someone else's wealth instead of your own.
At what point in society did building wealth become married to screwing over fellow humans?
A less drastic solution, which doesn't require much money, is to just force lenders to allow landlords who lost tenants or whose tenants can't pay to allow the landlord to defer loan payments (extending the final date of the loan).
It's not exactly fair to landlords who own the properties outright, but, I can live with that.
The problem with that is that owners are also short on cash so when the government doesn't allow evictions, they will also need to disallow the inevitable defaults on mortgages.
This will, of course, eventually be paid for by the US government. That money isn't free and will continue our entrenchment in stagflation.
For commercial landlords, we should probably let them stop paying their mortgages, etc., and then the Fed can give 0% loans to the banks who hold the other side of those loans.
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