All Rent Should Be Cancelled
Even early last week, before restaurants were closed, before we were banned from unnecessary gatherings, when many people still had to go into their office jobs, the bars were empty on my street. I walked into one, ordered a cocktail, asked the bartender why it was so slow. It was usually slow on Tuesdays, of course, but normally there was at least one other customer. But the pandemic had already scared everyone else away, and if it continued, the bar would surely have to close.
Then, the bartender casually mentioned that, if they had to close for a month, that would be the end of the business, because how would they pay rent? This hadn’t occurred to me, but given the steep prices of commercial real estate, it made sense. I began to fill with dread as I imagined this bar that I loved closing not for the duration of the pandemic but forever, and not just this bar, but any bar owned by local businesspeople, any bar that didn’t have the vast resources needed to just pay a few extra months of rent with no customers.
And now, all the restaurants are closed. Sure, many of them are making money doing take-out, but some of them are primarily bars. Most of them were selling an ambience as well as food, and none of them planned on a takeout only business. I am worried that, when all this is over, half of restaurants will be shuttered for lack of ability to pay their leases – or from falling behind on other bills because all their money went towards their leases.
Now, if landlords all behaved reasonably, I don’t think this would be a problem. Normally, if a business fails to pay rent, that means it should be replaced by a business that can. It’s not just a matter of one month of lost income for the landlord; it’s also a signal that more bad months are likely coming.
But in this situation, the signal would be all wrong. Whether a business does well or not in a “shelter in place” economy has nothing to do with whether it will do well when the restrictions are lifted. If a landlord shut down a bar because it can’t pay rent now, what reason would they have to believe that the business that would replace it would do any better when things are back to normal? How long would they have to find a new tenant? It’s in the landlord’s best interest to be understanding.
But unfortunately, I don’t think landlords will be as reasonable as they could. Sure, many will be forced to let businesses miss a few months of rent. But some of them will demand back payments, just because their contracts say they can, and while some businesses might be able to handle that, some will still close. Others might evict businesses that annoy them, and use this as a legal excuse, and other landlords might just not understand or decide to milk their tenants dry, even though it’s ultimately not in their own interest.
So, in everyone’s best interest, we should cancel rent. The argument I just made for businesses works for individuals as well – whether you can pay rent in the next few months has basically nothing to do with whether you normally can.
We should cancel rent, and not postpone it. Everyone can start doing it again when the shelter in place order is lifted, and the money starts flowing again, but only for subsequent months – no one should have to pay extra to catch up for the months we missed.
After all, are you getting your full use out of your housing during this month? Are businesses getting full use out of their land? I live in NYC because of my job – but now I’m not going to it. Businesses locate where they do to get customers – but now the customers aren’t allowed to come.
We should cancel rent, not just evictions. Because with a moritorium on evictions, landlords can still demand catch up rent once that moritorium is lifted. And many people will pay rent now when they actually can’t afford to.
New York City has loans to small businesses, but that’s not enough. That means they will still have to pay those loans back. Some businesses won’t be able to afford to, and not because they were bad businesses, but just because of the pandemic.
Unemployment benefits aren’t enough. The website is broken, and it requires a bunch of bureaucracy. It also doesn’t cover a lot of people who were self-employed, or under the table. And unemployment benefits for business owners isn’t enough to cover their business bills.
And who knows if Congress will ever figure out basic income?
Cancelling rent, on the other hand, won’t require any paperwork besides the original order. You just announce that rent is cancelled. Everyone, instead of paying, doesn’t pay. No website, no bureaucracy, no worrying about whether you’re claim is approved or not, or whether you meet the arcane requirements for the program.
Such extreme times require extreme measures, not just in preventing the spread of the virus, but in preventing economic devastation. I not only want to save the lives of every New Yorker, but when this social distancing is lifted, I want to be able to walk through the city, and see it full of all the restaurants, bars, and shops that were here before, every last one of them.
We’ve already put the state of New York on pause, including the flows of money. Money flows in cycles, and rent is normally one part of a fully functioning cycle. If we pause the rest of the cycle, we have to pause rent too.
With social distancing, we’ve cancelled going out. We’ve cancelled fun. We’ve cancelled millions of jobs. We’ve cancelled huge swaths of the economy. We should cancel rent.