Renters may get decade to pay back rent, interest free

Posted at 5:40 PM, May 12, 2020
and last updated 2020-05-12 21:04:06-04

SAN DIEGO (KGTV) — A new plan by California lawmakers would pave the way for financially strapped renters to pay back their rent over a decade, interest-free.

It's part of a larger budget proposal unveiled Tuesday by three state Senate Democrats, including San Diego's Toni Atkins.

The lawmakers say the plan would protect renters from being evicted amid the coronavirus outbreak while also ensuring landlord's are financially taken care of.

"This is not a giveaway to anyone. It's not a free ride. The senate is giving tenants and landlords a hand up, not a hand out," said State Sen. Steven Bradford, of Gardena.

Here's how it would work:

Renters who are facing financial hardship can enter into an agreement with their landlord and the state to defer their rent payments, paying back the money to the state via an interest free loan.

The state would then grant the landlord an income tax credit for the same amount as the deferred rent. Landlords would be able to claim one-tenth of the amount off their taxes over 10 years, or can sell the tax credit on the open market for immediate cash.

George Braudaway, a landlord who owns and manages apartments in San Diego County, said he was concerned that the deal would hurt mom-and-pop landlords. That's because banks would only buy the tax credits at a discount, squeezing what he says are already thin margins for local landlords.

"Property owners are going end up losing their property," he said. "Not only will the tenant not have somewhere to stay, the owner won't own the building."

In a statement, Kendra Bork, president of the Southern California Rental Housing Association, said she's aware of the proposal but that it was premature to comment.

"Renters and those who provide them shelter are certainly in need during this pandemic," she said. "We hope that any plan that ultimately comes forward truly factors in the needs and responsibilities of residential landlords. A holistic approach is needed to ensure stable rental housing now and into the future."

In some instances, the rent loans would be forgiven to those who are facing extreme financial hardship.

The final qualifications are still being worked out, but lawmakers said the tax credits would not be made available to large management companies. The plan would need to be approved by the state legislature and governor.