Eviction Moratoriums Pose Risks for Owners, Renters

Pandemic eviction moratoriums ended three years ago in New York, but a new one was approved last week by the Los Angeles County Board of Supervisors. The vote, resulting from a post-wildfire campaign by tenant activists, was 4-0 with one abstention.

Several similar measures are under consideration by other Southern California governments, but New York landlords should be paying attention. In the post-Covid era, it appears likely that after any economic disruption, progressives will push to pause rent payments — and succeed in left-leaning areas.

Under the L.A. County measure, tenants earning up to 150 percent of the area median income ($147,000 for a family of four) who self-certify that their income has dropped at least 10 percent as a result of the wildfires can defer rent payments for February through July. No proof is required.

They still have to pay rent for that period, but not until July 31, 2026. That means rent payments can be put off for 12 to 18 months. This and measures being pondered in Culver City, Pasadena, and the city of L.A. have outraged some people in the Southern California real estate industry.

The public-policy rationale for moratoriums during temporary downturns is that evictions can cause severe and lasting hardship for tenants, costing them and society dearly.

The risk of homelessness following eviction in expensive housing markets is acute, and the disruption to children’s lives can set them back permanently. Kids who fall behind in school go on to pay less tax and consume more social services over their lifetimes, as numerous studies have documented.

The argument against moratoriums is that if society benefits from fewer evictions, the government — not landlords — should foot the bill to achieve that result. Besides, governments never suspend landlords’ operating costs.

But there’s another reason to be cautious about suspending rent payments.

Tenants protected by the moratorium tend to live paycheck to paycheck. Those tempted to stop paying rent for six months will likely have a hard time catching up, even with the one-year grace period. A year can seem like a long time away, but it creeps up on you, as consumers who transfer credit card balances to get a teaser rate often discover.

The median rent in Los Angeles is $2,900. Come August 2026, a family that skipped the median rent for six months would have to pay for seven months at once, or $20,300. Renters’ median cash savings in the U.S. is $630.

It is conceivable that the moratorium could eventually result in more evictions, not fewer, than would otherwise have occurred. Most tenants will probably pay what they can during the moratorium, but any credit counselor will tell you that in the real world, when it comes to personal finances, people don’t always act in their best interest.

In New York, between the state and federal eviction moratoriums and the far left’s “cancel rent” campaign, many tenants thought they could stop paying rent for a while. Billions of dollars in arrears piled up during the pandemic, and federal rent relief only covered a portion of it.

Rent collection by the New York City Housing Authority and private affordable housing providers, not to mention by rent-stabilized and free-market building owners, dropped. For many landlords, it has still not fully recovered.