What Is ‘Cancel Rent,’ and How Should Landlords Prepare?
We’re hearing more about “cancel culture” lately — people who want to censor beliefs they don’t share — but what is the “cancel rent” program? Surely people don’t believe they can just live rent-free. Or do they?
The cancel rent idea
Some people believe tenants who are struggling financially because of the coronavirus should be able to live rent-free. And maybe they should. But certainly, landlords shouldn’t have to shoulder the burden. Landlords aren’t to blame for recent hardships. Try telling that to the “cancel rent” folks, though, and your words would probably fall on deaf ears, as they did in Ithaca, New York.
Rent cancellation passed in Ithaca
Enough people think canceling rent payments to landlords is a good idea that a rent cancelation measure was a topic of debate at the Ithaca City Council this past summer — and the measure passed — in a 6-4 vote.
Whether Ithaca plans to cancel rent or even has the authority to do so remains to be seen. Right now, the city council is using the fact it passed the rent cancellation measure as a threat to landlords: In a shakedown that would make Don Corleone proud, one councilmember is quoted by Time.com as saying to landlords, “We can cancel rent, or you can come to the table to talk.”
Eviction moratoriums
Under eviction moratoriums, landlords in certain circumstances can’t evict. But at least the rent will come due after the moratorium is up. Good luck to landlords, however, who try to collect. If renters are financially strapped now, how will they be able to come up with a huge lump sum of back rent later? The cancel rent groups, though, want even more: all back rent erased. They’re essentially asking landlords to pay for people’s housing.
How would this work?
If “cancel rent” becomes a thing, someone still needs to pay for housing. If it’s the landlord, the policy would not only be unfair; it would be a bit shortsighted as well.
For instance, I want to remain a landlord. I, like many mom-and-pop landlords, enjoy the work and are proud of the businesses we’ve built. But no landlord, including me, is doing this just for fun. Landlords need to make a living, too. And landlords have many expenses: a mortgage in many cases, property taxes, insurance, repairs, and maintenance, just to name a few.
Not being able to evict is bad enough, but now landlords aren’t supposed to collect rent either? It’s currently a seller’s market in most of the United States, so landlords will start selling if they aren’t allowed to collect rent.
If that happens, where would that leave tenants? Out on the streets — an outcome tenants’ rights groups are trying to avoid? Landlords are helping keep people housed, but no landlord can or will do this if they can’t collect rent.
Landlords: Know your town
If you’ll be doing business as a landlord, you can see the importance of keeping up with what’s happening in your locale. If there’s an active tenants’ rights organization, there should be a just-as-active landlord association. Landlords can go online to find local rental housing associations, landlord groups (online or off), and investment groups for their state.
The Millionacres bottom line
Owning investment property and renting it out can be a good, honest way to earn a living. But landlords, like any other businessperson, should be prepared to pivot. If government actions encroach on your private business and don’t allow you to make money at it, it could be time to sell.
Source: fool.com
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