During Covid crisis, asking landlords to go slow on rent is unfair

S Murlidharan | Updated on April 01, 2020 Published on April 01, 2020

For many senior citizens, rent is their only source of income. Also, it is wrong to equate all home-owners with the wealthy class having the innate capacity to make sacrifices

Delhi Chief Minister Arvind Kejriwal has sent out appeals to landlords to go slow on demanding rent from their tenants. The UP Chief Minister Yogi Adityanath has gone a step further and got issued magisterial order in the NOIDA region threatening landlords with two year imprisonment or fine should they evict their corona-scarred tenants during the period of one month starting April 1 if the tenants happen to be working in factories, companies or industries in the NOIDA or greater NOIDA area.

It is one thing for the government to give financial stimulus to industries and consumers as well as for the RBI to exhort banks to place a moratorium on EMIs for three months be they industrial or consumer loans including home loans but quite another for ordering citizens to show the same forbearance in this hour of crisis.

It is common to envision a landlord as rapacious but the truth is owners of properties are only getting recompense for usage of one of the factors of production. There are many senior citizens who live on the ground floor and rent out the first and second floors to tenants. And often that is their only source of income. It is insensitive to grudge them their dues. Far from being rapacious, they are doing a yeoman service to the nation by offering their properties on rent.

Yet a BJP MP from Bengaluru said on television that landlords should not demand rents because they have been spared off paying EMI for three months. First it is too sweeping to assume that all properties rented out are on mortgage. And, second, there is no back-to-back relationship between EMI and rent. It is not as if for a new property in Chennai, for example, the rent will match the EMI. Often the rent is just a fraction of the EMI. Rent only supplements the family income. Many NRI children buy flats in India and pay EMI so that their parents could live in them or meet their day-to- day expenses with the small rent they get.

To be sure, a considerate and well-endowed landlord may volunteer or accede to the request for moratorium on rent. But to compel them to do so whether legally as in UP or through media bombardment is just not done. The UP order also puts the onus on the landlord to verify if his tenant is indeed a worker. Many workers have been laid off by the factory owners many of whom belong to the MSME sector. So it is not as if the landlords are responsible for triggering migration back to villages in UP and Bihar from the NOIDA region. The more proximate cause is loss of employment.

Banks especially in the public sector can bide their time for three months. By the way the interest clock will keep ticking so much so that EMIs are likely to be revised upwards post moratorium. But landlords whose only source of income is rent do not have the capacity to wait. It is as cruel to expect landlords to wait as it would be for employers to ask their employees to accept wage cuts during the lockdown.

Don’t halt production

The Modi government must temper the need for preventing spread of the coronavirus epidemic with pragmatism — the wheels of production should not come to a screeching halt. This tightrope walk can be done by mandating random test for workers while ordering lockdown for others. If production especially of food items, baby food, medicines, protective gears like N-95 and N-99 masks and hazmat suits does not keep pace with their heightened demand in the wake of the pandemic, we may lurch from one crisis to another.

Workers may have to be transported to factories in buses chartered by factory owners from the state transport corporations. These buses are idling in any case. Similarly, hotels in factory areas, again languishing in the absence of business, can be hired by factory owners to accommodate workers so that they do not have to travel long distances. Needless to say, both hotels and buses must be suitably sanitised. Rickshaw pullers and construction workers temporarily laid off must be absorbed by factories.

Indeed if the wheels of production do not come to a standstill, there would neither be exodus nor the threat of eviction of tenants or termination of employment. It is the gloomy prognosis of loss of jobs that has been gnawing at the vitals of the migrant workers. Let us not turn the tide of frustration against landlords whose only fault is they are called ‘lords’ whereas they are just owners of properties. While the wealthy can and should make donations, it is wrong to equate home-owners with the wealthy class having the innate capacity to make sacrifices.

The writer is a Chennai-based chartered accountant

Published on April 01, 2020

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