How the Rent and Mortgage Cancellation Act of 2021 Would impact Real Estate

In early April, Congress approved a $2 trillion stimulus package that provided homeowners, tenants, businesses, and certain industries much-needed funds to help supplement the loss of income many have faced since the coronavirus outbreak.

Talk over the second round of stimulus is underway with three proposed policies on the table at the present time, one of which would have a big impact on homeowners, tenants, landlords, and real estate investors everywhere: The Rent and Mortgage Cancellation Act of 2020.

What the bill proposes

In the Rent and Mortgage Cancellation Act of 2020, all rental and mortgage payments would be eliminated, retroactive from April 2020 for the remainder of the state of emergency declaration.

A fund established by the United States Department of Housing and Urban Development (HUD) would repay any rent or mortgage payments made in April 2020 to the tenant or mortgagor.

Landlords and lenders would be unable to pursue past due rent or mortgage arrears, charge late fees, or report any missed payments to credit bureaus.

What the bill would require

The Landlord Relief Fund would require eligible landlords, which would include “small property owners, family investors, public housing authorities, non-profits, and cooperatives” to agree to the following terms for a period of five years:

  1. The rental rate cannot be increased over the following five years.
  2. Landlords can only evict for “just-cause” and must provide documentation with any just-cause eviction.
  3. The landlord cannot discriminate against a tenant’s income source.
  4. Landlords must coordinate with local housing authorities to make new vacancies eligible to Section 8 voucher holders.
  5. The sexual identity or orientation, gender identity or expression, conviction or arrest record, credit history, or immigration status of the tenant cannot be discriminated against.

    How this bill would affect real estate investors

    While this proposal does offer relief for millions of Americans who are currently unemployed or have seen a significant decrease in income from the recession, it puts real estate investors, and particularly landlords, in a very tough position.

    It forces the landlords to waive their right to annually adjust their rental rate to offset inflation, increased property taxes, or property insurance or to compensate for any other variable costs that rise with time in order to receive relief in the time being

    https://www.msn.com/en-us/money/realestate/how-the-rent-and-mortgage-cancellation-act-of-2020-would-impact-real-estate-investors/ar-BB139O5W?ocid=spartandhp