Rent Cancellation: Social Protection in Uncertain Times

50167834446_19f4a27852_oKrystle Okafor–

With the onset of the coronavirus pandemic, interlocking structural inequities in health, employment, and racial justice have buffeted vulnerable populations. The looming “eviction apocalypse” sits at the nexus of these three ills. Black and Latinx people have the highest COVID infection, death, and unemployment rates nationwide. Mass evictions would only worsen this situation, preventing these households from sheltering in place and deepening the adversity they face.

As the latest federal stimulus package lingers in the Senate and the re-openings of states’ economies stall, activists have called for rent cancellation—the wholesale suspension of rent payments during the pandemic. It is neither a farfetched nor overblown proposition. Movements have made rent cancellation a central goal. Combined with precedential rent control cases, governments have the political and legal wherewithal to cancel rent. Further, social protection systems, institutional arrangements to insure against lifecycle and work-related contingencies, often evolve during times of crisis. If rent cancellation takes the form of a supply-side, landlord-facing debt relief program and is gusseted with tenants’ rights provisions, it could seize the moment, pass constitutional muster, and as I argue here, confer the necessary degree of social protection. Two arguments bear this out.

First, shifting risk from tenants to landlords is not spoliation, but disgorgement. Due to decades of underinvestment and deregulation, American social housing has undergone risk privatization, in which programs cover a declining portion of the risk vulnerable populations face. Instead of deep subsidies like Section 8 Housing Choice Vouchers, low-income renters are offered shallow subsidies like “one-shot” loans and other short-term supports. Risk privatization fosters a climate in which over 80% of the nation’s low-income households are housing cost burdened, dedicating an unsustainable portion of their monthly incomes to rent.

Risk privatization has also produced a cushion for landlords who rent to low-income households. Matthew Desmond has shown how landlords in low-income neighborhoods overcharge renters relative to the market value of their properties, extracting higher profit margins than owners in higher income areas. Analyzing a nationally representative sample from the U.S. Rental Housing Finance Survey, Desmond found that overcharging is two times more common in higher poverty neighborhoods than in lower poverty ones.

Desmond demonstrates that structural inequity is not a mere moral abstraction—it is an empirical fact. His data suggest that landlords, particularly the oft-invoked mom-and-pops in low-income neighborhoods, may be well positioned to withstand eviction moratoria that are met with financial assistance upon expiration. Those who leverage structural inequities for financial gain should be disgorged or, at minimum, be charged with bearing risk during times of crisis. Distributive justice requires no less.

Second, rent cancellation is a universal policy that trumps selective ones. Universal social programs are those, like public schooling, that are available to all irrespective of income. Selective social programs are those, like free and reduced-price school lunch, that require a means test, an assessment of potential recipients’ financial need. Selective programs predominate in the American welfare state because they are cost effective, reserving aid for the “deserving poor.” However, universal social programs are particularly well-tailored to periods of national strife. They capture hard-to-reach populations and are associated with social cohesion.

As the nation enters yet another month of mounting rental arrears, economic uncertainty, and civil unrest, rent cancellation crystallizes as a remedy for social malaise and an improvement to the inadequate patchwork of selective programs that is typically offered to cash-strapped renters. Universal rent cancellation could be implemented without means tests, which disadvantage people who are undocumented, working unreported jobs, or disconnected from social service agencies. It could allay households’ shared anxieties just as the combination of social investment and robust taxation did during the New Deal era, Black exclusion notwithstanding.

The COVID-19 pandemic is just the sort of shock that social protection systems were intended to address. Americans, especially those who experience the most societal vulnerability, have depended on social protection to reduce risk and ward off shock-induced hardship. If we understand rent cancellation as social protection, its viability—and necessity—is evident. Rent cancellation is a practical resolution to our present circumstances, one with empirical and historical justifications.

Krystle Okafor is a J.D. candidate, Root-Tilden-Kern Scholar, and Moelis Urban Law and Public Affairs Fellow at the New York University School of Law.