CERB: Relief for tenants or bail out for landlords?
The CERB going out under conditions in which rent payment is due just means relief for landlords and crumbs for tenants. There is no avoiding or ignoring the double-crisis tenants will face every month that the COVID-19 crisis goes on while rent is expected.
The setup here is that individual tenants are being required to assume all the financial and legal responsibility for securing a bailout for landlords while being told the Federal Government has saved us. Landlords waited for April 6th with even more anticipation than tenants themselves. It’s why they have repeatedly reminded tenants to apply for this relief money. They view it as their money. On the day that the CERB was made available, tenants across the city have been contacted with renewed demands for immediate payment of rent or commitments to the above mentioned potentially catastrophic “repayment agreements”.
These landlords know as well as anyone that the math doesn’t add up. Paying back April’s rent on top of future rent within a few months will not be possible for many tenants. To make matters worse, these repayment plans are often contingent on tenants signing to voluntarily vacate if all terms of their repayment agreement are not met. This effectively eliminates a defense against eviction at the Landlord and Tenant Board when it re-opens. If a landlord is able to get 75%-95% of each tenant’s CERB, then they will. But they are also more than satisfied with getting every dollar that they can while also guaranteeing they can get rid of lower income tenants.Even for those who qualify, the Canada Emergency Response Benefit doesn’t add up to as much as we might think. We’ve all heard the “$2,000/mo for all Canadians in need” figure. This $2,000/mo is taxable income and repayment will be required. The taxable portion (say 20% or $400/mo) is a debt. To view it as anything other than a debt is dangerous.
Now, let’s do some simple addition: In Toronto, the average rent for a 1 bedroom overall sits at about $1,500/mo and a bachelor costs $1,200/mo. But the newer the lease the higher the rent. Leases on 1 bedrooms signed in 2020 had an average rent of $2,300/mo.
Best case scenario: With $1,600/mo from CERB (after tax) and $1,200 ~ $1,500 monthly rent, a tenant has $100 ~ $400 to survive on for a month (not including debt accumulated).If 75%-95% of the CERB is expected to go to landlords then who is this relief actually for, and what emergency is being prioritized? Are unemployed tenants really expected to survive a global pandemic on as little as $25 a week while landlords are paid in full?
Very few tenants who receive money through the CERB will have anywhere near enough to cover rent, food, and other supplies for April. Let alone be able to pay May rent as well.
And tenants with no income who can’t get the CERB money will just be abandoned to eventual eviction or crippling debt?The willful ignorance of simple math that politicians, bankers, and landlords continue to operate under with respect to rent is unacceptable. As long as rent remains on the table for the 700,000+ tenant households in Toronto, it is a clear and present danger to the health and safety of everyone.
1. As of April 7, 2020, the CERB excludes hundreds of thousands of workers
Approximately 842,000 workers in Canada will (or should) receive nothing from the CERB under its current structure, according to a study by the Canadian Centre for Policy Alternatives. Currently excluded groups include the following:
- workers who lost their jobs before the COVID-19 crisis but did not work enough hours to qualify for EI;
- freelance or self-employed workers whose income has been dramatically reduced but not wiped out entirely;
- “gig economy” or part-time workers who pick up an occasional shift;
- migrant workers who don’t have a valid Social Insurance Number or Individual Tax Number;
- students, recent graduates or others who earned less than $5,000 in the past year;
- any worker who “voluntarily” stopped working at some point during the crisis.
These exclusions may change as new policies are announced but these groups remain excluded as of now.
2. The CERB is taxable income
Workers who qualify for the CERB will have to repay a significant chunk of the $2,000 they receive when filing their taxes next year. Assuming a 20% income tax rate, $400 per month will have to be repaid which means the CERB is really worth $1,600/mo at the end of the day. Rent for a one bedroom apartment in Toronto is close to or above the full $2,000/mo CERB payout. Remember that there is no way for workers to make up this difference, because they are not allowed to earn additional income while receiving the CERB. Using the CERB to pay rent leaves tenants with virtually no money to live on. Potentially for months.
3. The CERB is time limited
The economic fallout of COVID-19 will far outlast it. The coverage period for CERB ends October 3rd 2020. Over a 34 week period, an unemployed worker is entitled to a maximum of 16 weeks’ worth of benefits, which is $8,000 (or $6,400 after taxes). The government has given no indication that workers who remain unemployed for more than 16 weeks will receive EI or some other benefit. It is entirely possible that those who receive the full CERB benefit will have to rely on this money to survive through the summer and fall. And it is entirely possible that those that cannot survive on that little for so long will be forced to work in unsafe conditions for either themselves or others. Or access some form of debt. Either of these two options would exacerbate or prolong either a public health crisis, economic crisis, or both.
4. There is little oversight or verification
ALL applicants for the CERB are apparently being approved. If someone accesses relief in error or CRA disqualifies a person next year, that person will then be faced with repayment of the relief money and further financial or legal penalties. The guidelines for eligibility are entirely unclear for many unemployed workers. If it turns out that the full CERB would be required to be repaid by an unemployed worker and 75%+ of that money had already been given to their landlord, that financial burden will crush someone that has been fortunate enough to make it through the COVID-19 crisis. Burdening unemployed workers with the responsibility of determining their own eligibility as well as facing severe repercussions for any mistakes made, just drops a ticking time bomb into their already overburdened and uncertain lives.