The US narrowly averted a government shutdown when Congress passed a temporary funding bill on November 14 – but concerns have now resurfaced for January.
Politicians return from winter break on January 9, just 10 days before the first of two deadlines to fund the government – and if they miss that date, the rental market and its stakeholders could find themselves caught in the deadlock.
In the event of a shutdown, many federal employees and contractors would see a pause in paychecks, which could affect their ability to pay rent or make mortgage payments on an investment property. Programs like Low Income Housing Tax Credit and Section 8 would also face delays, impacting affordable housing options for tenants, landlords, and property managers alike.
For tenants reliant on food benefits, disruptions in the Supplemental Nutrition Assistance Program (SNAP) could create difficulties in paying rent as they adjust their budgets.
Developers and builders relying on government funding for projects could experience a slowdown in new construction, particularly for larger multifamily complexes.
The longer the shutdown goes on, the worse the adverse effects on the rental market, economic growth, and consumer/investor sentiment become. That being said, in 2018 and 2019, the rental market weathered a historic 35-day government shutdown. Despite challenges, such as the Department of Housing and Urban Development (HUD) being unable to renew 1,150 contracts with owners housing low-income Americans, HUD assured landlords of repayment and emphasized that the department had seen "no tenant evictions as a result of an interruption in housing assistance payments."
Property managers can proactively prepare by helping landlords create reserves to cover at least six months of property expenses, streamlining operations for greater efficiency, and exploring strategies such as diversifying their rental portfolio and adopting online rent payment and arrears management technology.
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