Corona Daily 393: You Can’t Stay at Home

Yesterday, I talked about employees fortunate enough to retain their jobs by working from home. At the other end of the spectrum are those living in rented houses, who have lost their jobs. Low-income, daily wage workers are the worst affected. They risk being kicked out of their homes.

USA, England and Wales (not UK), were quick to announce a ban on evictions (landlords removing tenants) and foreclosures (banks confiscating the house for non-payment of a mortgage). In August, the moratoriums will come to an end.

In India, informal requests were made to landlords to be compassionate and delay or waive rent. No ordinance has been passed. This was one reason why daily-wage migrants desperately tried to return to their villages. Reserve Bank of India allowed delay of mortgage payment, though warning that interest for delayed payment will be charged.

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Evictions have now started in the USA. In the middle of May, the Texas Supreme Court ordered resumption of evictions and debt collection. The Sheriff of Oklahoma County tweeted: “This is difficult… Deputies will start serving judicial eviction notices this week and enforcing evictions on May 26. Once the order is served, tenants have 48 hours to leave. We will be compassionate & respectful during evictions.”

One institute estimates 28 million renters risk evictions (22.5% of American households). Undocumented and illegal migrants prefer to be evicted, rather than deported, by letting the authorities know about them. The dreaded scenario of an eviction notice on the door, a knock from the sheriff’s deputies, and family possessions landing on the street is already happening. Evicted people are worried about being taken to homeless shelters. These crowded shelters are infamous for being Covid-19 hotspots.

UK has 8 million tenants, of whom 4.5 million have private landlords. Others rent from councils and housing associations. England moved the moratorium from 25 June to 31 August. (The expression kicking the can down the road was made famous by Brexit).

Rent is not waived in any country, only eviction delayed.

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It is generally assumed that the landlord is wealthier than the renter. That is not always the case. For some widows, property rent is their only income for survival. Many house owners have hefty mortgages to pay. In England buy-to-let is quite common. Reportedly, these mortgages are not covered under the moratorium.

This is one of the pandemic’s irresolvable issues. To be fair to renters is to be unfair to landlords. And those two have a contractual relationship. In a domino chain, the tenant pays rent to the house owner, who may be paying mortgage to the bank. The bank has lent that money from the depositors’ savings. In similar crises, banks may end up with lots of foreclosed (confiscated) properties which are not sellable. Liquidity is affected, and depositors may not be able to withdraw their own money.

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With campuses and hostels shut, students have moved back to their parents’ houses where possible. With no government support, evicted Indians will need to move to the houses of their relatives/friends or be homeless.

For renters without jobs and savings, eviction is only a matter of time. USA and UK will have to stop issuing stimulus checks at some point. The moratorium on evictions and foreclosures ends in August.

From September, we may see a flood of evictions and an epidemic of homelessness.

Ravi