Eviction moratoriums have hurt landlords and they might exacerbate the housing crisis in Minnesota

In March, Governor Tim Walz enacted an executive order that banned evictions. This was supposed to shield unemployed, low-income individuals from eviction. While the order has been tweaked to include some exceptions, it still maintains that landlords cannot evict tenants for nonpayment of rent during the peacetime emergency period. The emergency period currently extends until November 12.

A landlord can evict a tenant only if the tenant poses serious danger to the safety of other residents, causes significant damage, or violates other laws. However, according to landlords (or the Minnesota Multi-Housing Association), this standard is very subjective, and courts have been interpreting it fairly stringently, preventing landlords from addressing bad behavior.

But even leaving the subjective nature of these exemptions, these moratorium are also doing their own damage. With landlords unable to evict tenants, they lose income to maintain and invest in other housing. This could discourage investment in the housing market, exacerbating the housing crisis.

The extended eviction moratorium will worsen the housing crisis

Much like any businessman, landlords invest in housing to make a profit. Denying property owners the right to enforce evictions reduces revenue and jeopardizes their ability to meet their financial obligations like mortgages, property taxes, employee salaries, and utilities. This is especially crucial for mom and pop property owners who, for the most part, do not have large portfolios to help ease their financial burden.

In the long run, this moratorium will likely discourage investments into new rental housing and maintenance of existing houses, leading to deterioration or loss of value. Small property owners may be forced to sell their property which would particularly hurt rental housing at the lower end of the rent spectrum.

Mom and pop landlords

In September Star Tribune reported that landlords have been hard-hit since the moratorium was enacted, with Mom and pop landlord going as far as using retirement funds to cover bills.

Small landlords are growing more economically and emotionally strained as the state’s eviction moratorium continues amid calls for social distancing and staying home during the COVID-19 pandemic.

In surveys of landlords, Gather Minnesota heard stories of some taking out money from their retirement to cover bills. Some tenants had stopped paying for utilities. Others abandoned their units without notice. Some tenants are telling their landlords they won’t pay rent, knowing they can’t be evicted.

While tenants can access rent assistance programs and other social services, Minnesota landlords have expressed anxiety about still needing to pay for property taxes, repairs and utilities.

COVID-19 has already affected housing

Disruptions in the supply chain have halted construction or made housing projects more expensive, which would likely reduce the growth of housing supply for the foreseeable future. Eviction moratoriums, while well-intended, will likely only worsen this trend.