Are Enhanced Unemployment Benefits Keeping Rent Payments on Track?

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rent payments

Q2 rent payments came in at close to normal rates

When the COVID-19 crisis emerged in the U.S. in March, rent forbearance measures were adopted in many localities to protect unemployed renters from eviction. At the time, landlords braced for major losses due to their tenants electing to skip rent payments for a few months.

It turned out that April rent payments came in solid, with some forecasters then predicting that unemployed tenants would run out of money by May 1 and begin taking advantage of the forbearance measures by skipping May rent payments.

But May rents were collected at close to normal rates as well, then June rent payments also came in solid. Some rental property operators report that despite the pandemic's effect on local economies, they are getting new leases signed at a pace pretty close to Pre-COVID levels.

CARES Act provisions help tenants make rent payments

While there is always some debate on whether and how much the government should intervene with cash stimulus during an economic crisis, many rental property investors believe that the government’s CARES Act stimulus provisions, such as the $600 enhancements added to unemployment benefits, have helped to keep their tenants’ rent payments on track.

Unemployment enhancements are set to expire in July

“The enhanced unemployment benefits are very important to people, especially those that are in lower paying jobs,” says Bob Pinnegar, president and CEO of the National Apartment Association. “They're really helping them to make ends meet and to be able to put food on the table, to pay their utilities and to pay their rent. The challenge is going to be going forward.”

HEROES Act Would Extend Unemployment Supplement

In May, the U.S. Congress approved the HEROES Act, a $3 trillion stimulus package that would extend the $600-a-week unemployment supplement through the year. Senate Republicans don't like the HEROES Act in its current form, and most believe the unemployment enhancements are encouraging recipients to stay jobless. They have vowed not to let it pass the Senate.

To counter those concerns, Republican Senator Rob Portman, of Ohio, and Representative Kevin Brady (R-Texas), have proposed a $450 a week "back to work" bonus for laid-off Americans who return to their jobs. Representative Don Beyer (D-Virginia), suggests it might be better to keep the enhancement and gradually slash the $600 weekly payment until it reaches $300 by the end of 2020.

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