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The perilous side-effects of banning evictions mean it can’t go on forever

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The perilous side-effects of banning evictions mean it  can’t go on forever 1

As progressive legislation goes, the state Legislature’s recent extension of the moratorium on evictions in New York is far from the worst. The new law shows some awareness that small property owners face their own economic crisis if tenants cease paying rent. It calls for a pause in foreclosure proceedings for them. And lawmakers clearly recognized that evictions can be crucial in preserving health and safety — by permitting them in the case of disruptive tenants. 

Still, the eviction ban can’t go on indefinitely. As the old economic adage goes, there is no free lunch. There are dangerous side effects to depriving landlords of justly owed rents.

To be clear, there is hard evidence that New Yorkers are, indeed, having a hard time paying their rent. Fifteen percent of rent payments in New York were missed in December, according to the National Multifamily Housing Council — four times higher than the rate in Los Angeles and five times higher than in Fort Worth, Orlando and Raleigh. Indeed, the Empire State’s rate is the highest in the nation — proof that harsh lockdowns kill livelihoods.

Even so, small property owners need their rental income for lots of reasons other than paying their mortgages and avoiding foreclosure, though that’s a crucial necessity, too. They need the income themselves: for groceries, utilities and other basics, as The Post’s heartbreaking story about 88-year-old Harlem landlord David Howson made clear.

In effect, Howson and thousands of other mom-and-pop property owners are being mandated to provide an interest-free loan to any tenant who chooses to put off paying rent. There will inevitably be some tenants who simply move out when their leases expire — and never repay those missed rents. Small landlords simply lack the means — including the legal sophistication — to pursue deadbeats taking advantage of the law.

Think, too, about the other destinations for some of that rental income: building maintenance and improvements. The law is a recipe for “shabbification” (the opposite of gentrification) of rental properties. It spells disaster for the ecosystem of small contractors who repair boilers, roofs and plumbing. Some economists like to talk about the “multiplier effect” of government deficit spending: how $1 can cascade through the economy. This is the opposite: an inverse multiplier that stops the flow of funds.

That will be just as true, or more, for the owners of larger, 10-plus-unit buildings, which aren’t protected by the new law from foreclosure. It’s likely that larger firms will work out settlements with banks, but they, too, will see their income reduced and thus be forced to cut back on repairs and maintenance. 

That’s how the city’s public housing got in the awful shape it’s in. (Come to think of it, if New York City Housing Authority rent payments fall, that will compound that crisis.) True, some larger owners may find a way to qualify for the new round of paycheck-protection loans from Washington, but that will constitute an interest-free loan from already-strapped taxpayers.

Keep in mind, too, that landlords aren’t going to be keen to evict tenants at a time when the city’s population has fallen sharply. Better to work out a reduced rent than to have a vacant apartment. 

There’s a larger point here that transcends housing and eviction policy. Progressive officials consistently resist seeing the bigger picture; they intervene to relieve visible crises but are blind to the problems they may cause. When Gov. Cuomo threatens to fine Con Edison $100 million or more for service issues, he’s sending a new bill to ratepayers or those who rely on utility dividends — or compromising maintenance. When Park Slope state Assemblyman Robert Carroll proposes to tax all package deliveries in the city — call it the Amazon tax — to help fund the MTA, he overlooks the fact that the tax will fall on those of all incomes, including New Yorkers who rely on the subways and pay the fares.

The message here for legislators: Think things through before you act. And don’t extend the eviction ban indefinitely.

Howard Husock is an adjunct scholar at the American Enterprise Institute. His book “The Poor Side of Town — and Why We Need it” will be published this fall.

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