The ripple effects of the rent crisis

You may have heard the term “direct rental assistance” discussed with regard to federal stimulus packages, but what is direct rental assistance and who does it help? Here’s why current and future American renters should understand the term and realize what’s at stake:

What is direct rental assistance?

Rental assistance refers to programs that provide fixed monthly funds for rent payments to eligible residents with critical emergency housing needs.

It differs from a stimulus check because the funds are specifically targeted and allocated to rent bills, which helps struggling renters stay in their homes, and ensures rental property owners and operators can continue to meet their financial obligations and keep rental apartments running.

Rent is a critical cog in the broader economy and sustainable, comprehensive solutions are the only option.

Thirty-two percent of renters entered September with pandemic-related rental debt — with millions of Americans still unemployed or facing salary cuts, that number is only projected to grow. Experts are predicting that there will be a $34 billion deficit in rent paid by the first of the year.

Meanwhile, the small, mom-and-pop housing providers (one-to-four units) that own more than half of the rental housing stock, or about 22.3 million rental units, are struggling to pay their bills, and even larger providers have run out of reserves. When rent goes unpaid, quality of life deteriorates for residents and others in the surrounding neighborhoods, with owners forced to make tough decisions about staffing, routine maintenance, repairs and property improvements.

We are already witnessing increasing vacancy rates and declining rents. On top of billions of dollars in unpaid rent, housing providers are going to be unable to meet their financial obligations. In the long-term, this means millions of units are at risk of foreclosure, costing residents their homes and owners their livelihoods, further depleting a housing stock that was already in short supply pre-pandemic.

Affordability and quality of housing are at stake — if owners don’t have the funds to pay for maintenance and capital improvements, we’re going to see more units fall into disrepair, hurting residents and local communities. At the same time, foreclosures will exacerbate the affordable housing shortage.

The rental lifestyle is meant to facilitate choice and flexibility — the opportunity to move about freely, choosing from a diverse menu of options that includes single-family homes, studios, suburban mid-rises, micro-apartments, luxury living and more. As more owners face the possibility of foreclosures, we risk losing this intrinsically American characteristic of the housing market.

The convenience that rental living provides — from maintenance services to amenity offerings — provides significant value to renters. As owners are forced to cut costs, residents may see these options impacted.

Combined, mortgages and property taxes absorb more than 50 percent of rent payments — and without sufficient income, owners won’t be able to pay these bills either. Property taxes fund schools and other local programs, ultimately affecting communities’ ability to pay teacher salaries, firefighters and other emergency services.

Direct rental assistance won’t just help a small segment of the population — it’s needed to sustain the community at large. During the pandemic, we’ve seen striking examples of individuals and communities coming together to support one another. Housing is a critical need, and the viability of the housing stock impacts everyone, renters — housing providers, homeowners and community members — so it is vital we come together to help residents and owners alike with direct rental assistance.

Robert Pinnegar is president and chief executive of the National Apartment Association.