As 2020 Ends, So Do Pandemic Relief Programs
Editor's Note: Congress has agreed on a new COVID-19 relief stimulus package - read more in our latest Insights here.
The year 2020 brought physical, emotional and financial hardship to many Americans. While promising news on the efficacy of a vaccine has brought hope that the COVID-19 pandemic can be brought under control, there are some more immediate concerns that the turnover into the New Year could be financially painful.
In March, the initial reaction to the pandemic and economic shutdown brought swift action from Congress and the federal government to support Americans impacted by the virus by business closures and travel restrictions.
While some political observers hope that some stimulus program could be passed by Congress before the end of the year, many believe it will be at least January before a relief bill is passed. Even if a COVID-19 relief bill is passed in December, direct payments to families are unlikely to arrive until early January or later. If a bill is not passed until sometime in January, families will wait even longer for financial help.
Provisions set to expire
Numerous policies and programs rolled out in the wake of the pandemic have the expiration date of December 31, 2020, which could have an impact on the ability of tenants to pay rent. The national eviction moratorium established by the CDC is scheduled to expire by the end of the year and with late fees and back rent accumulating for many months, renters may find it impossible to avoid eviction. No federal financial aid has been designated for renters or for landlords to resolve the impasse, although some state and local jurisdictions have funds to help renters with their housing payments.
The programs that have kept some renters and landlords afloat even if they are unemployed or have reduced pay are also expiring.
The Pandemic Unemployment Compensation (PUC) and the Pandemic Unemployment Assistance (PUA), which were designed to provide benefits to employees and gig workers who lost income due to COVID-19, both expire at the end of the year. These two programs boosted state unemployment benefits by $600 per week initially and then with an extra $300 per week once the first program ended. Funds for the second program, which was funneled through state unemployment offices, have mostly been depleted already.
Traditional state unemployment benefits max out at 26 weeks, so for people who lost their jobs early in the pandemic, those benefits have expired. The Pandemic Emergency Unemployment Compensation extended unemployment benefits for an additional 13 weeks, but it too is scheduled to end December 31.
In addition, the federal student loan forbearance program, which allowed millions of people with student loans to put their payments on hold, is scheduled to end before January 1, 2021. The Small Business Debt Relief program, which allowed businesses to defer payments on certain debts, will also expire. Business owners and self-employed individuals will also face the expiration of some other benefits such as the refundable tax credit for required paid leave, the credit for family and sick leave and the payment delay on employer payroll taxes. The tax deduction for energy efficient commercial buildings will end, along with the new markets tax credit, both of which have been beneficial to some multifamily owners.
Impact on Multifamily Sector
The multifamily sector fared better than expected throughout the pandemic period, with higher percentages of tenants able to make their monthly payments with the support of federal stimulus funds and other policies. Some landlords were able to pause their mortgage payments with forbearance programs. However, those programs and other tax provisions that support individuals and business owners are also set to expire on December 31, 2020. While a new round of COVID-19 relief is anticipated, at the moment, there is no certainty on when that may happen.
There is the potential that renters will need more time to delay their lease obligations and may be at risk of eviction if further federal monetary relief does not materialize. In turn, this may strain landlords and their own mortgage obligations, causing a ripple effect in the multifamily housing sector. At the same time, state and local governments may create their own policies to protect residents and landlords from growing financial burdens, so it remains to be seen what 2021 holds in store.