The $900 billion Coronavirus Response and Relief Supplemental Appropriations Act, which was signed into law on Dec. 27, 2020, includes a $25 billion emergency rental assistance program to help tenants unable to pay rent and utilities because of the pandemic-driven recession.
This initiative also eases the financial burden on landlords to cover at-risk residents. The U.S. Department of the Treasury will issue the funds to state and local governments to use for existing or new rental assistance programs. However, the program is only available for renters who meet specific qualifications, in addition to other important eligibility guidelines.
Who is Eligible?
The emergency rental assistance program was designed to help those with actual need for the federal support. It targets low- to medium-income tenants who have experienced financial hardship due to COVID-19 and are at risk of homelessness.
To qualify, a household must have an area median income (AMI) at or below 80 percent, and households with incomes at or below 50 percent of AMI are prioritized. Additionally, one or more individuals in the household must:
- Qualify for unemployment insurance benefits, or had household income reduced, or incurred significant costs, or experienced financial hardship because of the virus.
- Demonstrate a risk of homelessness or housing instability.
There is no requirement for a certain length of tenure in the unit where the household resides to qualify for the program, according to the Treasury Department.
How Does the Program Work?
Not all governments are entitled to emergency rental assistance funds. The Treasury Department will provide funds directly to states, the District of Columbia, U.S. territories, Indian tribes, and the 426 local governments with a population of more than 200,000 residents. At least 90 percent of the funds must be used for direct financial assistance to renters, and they must be used by Dec. 31st, 2021.
Eligible households may receive up to 12 months of rental assistance, which could be expanded an additional three months, if need is determined for the household and if funds are still available.
The rental assistance funds can cover rent (and rent arrears), certain utilities (such as electricity, gas, water, sewer, and trash removal), home energy costs (and arrears), and other expenses related to housing. However, it does not cover telephone, cable or internet bills. Utilities that are covered by landlords are treated as rent.
The rental assistance provided prioritizes the payment of existing arrears that threaten eviction, and assistance must be used for existing arrears before eligible tenants can receive funds for future rent payments. The aid will be provided in three-month increments, and then households must reapply for another three months. Income eligibility will be determined every three months.
Eligible households seeking rental assistance must apply to their local or state government’s rental assistance programs, and not directly to the Treasury Department. Many states and local governments already have established rental assistance programs and will use those to distribute the funds.
Applications may be submitted by either a tenant or by a landlord on behalf of tenants. Funds will be paid directly to landlords and utilities, unless the landlord declines to participate, in which case the funds will go directly to the household in need.