The rent moratorium reshaped the rental property industry into a sub-prime lending nightmare, but it didn’t have to be that way.

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Photo by Tierra Mallorca on Unsplash.

When all the data is in at last about COVID19 and all its attendant disasters, it will be much easier to judge the effectiveness, necessity and success of some of the more unprecedented measures the U.S. took to beat the pandemic.

Even the idea of “beating COVID19” has become somewhat outmoded, replaced by a growing awareness, and consensus, among experts, media outlets and cultural gatekeepers that the virus may be with us for a very long time, perhaps forever.

As such, the thinking goes, it might be something we have to learn to live with rather than aspire to eradicate.

Human beings don’t have many natural enemies, so we aren’t exactly used to all this. We don’t have any in fact, save polar bears and mountain lions, and there aren’t enough of either to pose a real threat. Sharks are an even more undersize risk to us, as are animals like lions. Hippo kill more people in Africa than lions. Cape Buffalo are second.

Our only natural enemies, the only things that pose a real danger to our survival (besides ourselves) are of the microscopic variety. Humanity’s struggles against virus and disease have been long, arduous and horrifying. Epidemics like the Black Death and Small Pox changed history, reshaped societies, and left a legacy of fear that advances in medical science haven’t managed to quell.

Scientists, virologists and even U.S. diplomats have been warning for years about the likelihood of a viral outbreak. Wet markets in particular have been mentioned as the perfect incubator for a zoonotic pathogen to jump species.

Even with all the warnings, all the historical precedence; even considering other recent outbreaks like Swine Flu and SARS; even given the horrors of a virus like Ebola Zaire: We weren’t prepared.

Not only wasn’t the U.S. adequately prepared with a game plan for dealing with a pandemic scenario like COVID19, most other developed nations haven’t fared any better.

As a result of not having a plan, the patchwork of policy, mandates, moratoriums and shut-downs have almost certainly included some misses.

Closing public schools in so many districts, for instance, while private schools and schools in surrounding areas with similar case counts and hospitalization rates stayed open, might come in time to be viewed as not something worth repeating during future pandemics.

That’s right: Future pandemics.

Medical science is amazing, vaccinations and cures have changed the world for the better. They’ve increased the average human life expectancy nicely. But you’d be hard pressed to find a single medical or scientific expert in communicable diseases, viruses or pathogens who would be willing to call COVID19 the end of mankind’s struggle against our microscopic nemesis.

We are always evolving; adapting to our environment and adapting that environment to ourselves: Viruses and pathogens are doing the same.

We may yet face more variants of COVID19. There will probably be another pandemic of unknown origin at some point. There are plenty of diseases, viruses, syndromes and other ailments for which science has no cure and might never have one.

What world governments do and don’t do, next time, should be based on what we’ve learned this time. Some things worked much better than others; a fact which will only become more clear with time.

In time, we will also find out the long-term cost of some of the more unprecedented steps we took to combat COVID19. How much did kids lose who were kept out of school?

How many small businesses did Main Street lose?

How did the rent moratorium change the residential renting industry?

The policy of making it impossible for property owners to enforce rent payment during the pandemic was met with approval on the far-left and some trepidation by moderates.

A rental property, progressives argued, is an investment- not guaranteed to work out. Sometimes investments lose money, that’s life. A property owner losing money on an investment is better than a family being evicted from their home during a pandemic when everything is shut down and they might not be able to work.

Like all great lies, all of that is true. And it’s all wrong.

A rental property is an investment without a guaranteed return. Investments do lose money. That is better than a family being evicted during a pandemic.

The lie is in the false dichotomy. Progressives presented this argument as a false choice: A moratorium on rent or mass evictions.

Many countries who took measures to prevent people from being evicted for nonpayment of rent also took steps to ensure rental-property owners weren’t left holding the bag.

Perhaps progressives think property owners deserve to hold the bag but that isn’t the point.

The real point is: Who wants to hold the bag now?

Going forward, who is getting into the residential rental industry?

Who is getting out?

The answers to these questions are why this particular COVID19 mitigation policy needs improvement for our next bout with our microscopic adversaries.

For now, investments in the residential property industry have become high-risk. Risk-adverse investors are getting out- retired couples who own a couple of properties to supplement their Social Security income, small-scale property owners, fix-up hobbyists.

Sub-prime lenders are moving in.

Well; they would. Who else invests in high-risk investments?

Given the increased risk of default on a financial lease agreement, the new titans of the rental industry and larger corporations keen on mitigating that risk are going to take steps we know well from other sub-prime lending situations.

The bottom line is less for more.

Renters will be forced to pay sub-prime landlords more for less. Sub-prime lenders always have to charge more to compensate for those who default. Rental property management companies, old and new, will take other steps to mitigate risk as well: Requiring six months or a year of rent instead of the old standard of first and last month’s; more stringent credit, background and reference checks.

The result of this, is that rent is up- in some places as much as 40%- and it isn’t going back down.

Probably not for a very long time, if ever. To improve the rental property market, and attract risk-adverse investors again, will take a great deal of work by legislators, lawmakers and even local governments.

The industry might never recover.

With so many renters facing impossible increases, the options are limited: You can’t force people to invest in the rental property industry. They might do it to make a profit, but no one goes into business, makes an investment, rents out a house expecting to lose money.

The only other option, of course, for economically disadvantaged renters- who will increasingly be priced out of the market by rising rents- will be government housing.

Government housing, it should be noted, does not have a sterling reputation.

The answer to this conundrum, though it comes too late, wasn’t less government housing, however: It was more.

Subsidizing every rental property owner, compensating them under current government housing statutes, would have had a completely different net result. The rental market might, even now, be settling back into a pre-COVID19 normalcy.

Buying a rental property might still be a low-risk undertaking attracting plenty of cottage investors.

Instead, higher rents are here to stay.

(contributing writer, Brooke Bell)