We are hearing stories about landlords trying to get tenants evicted. How dire is the rental payment situation actually? And how are landlords (and aspiring landlords like us) coping with it?
A: A staggering 88% of tenants believe that they will be able to afford only monthly rents that are reduced by 10% for the next year, while more than a third of tenants say they would move for a better deal.
The vast majority of landlords (85%) own bonded properties, so it’s unsurprising that 37% said they could not afford to self-fund more than one month of vacancy.
Half of those landlords indicated that they could not fund even a single month of vacancy. However, despite the severity of the financial impact of the pandemic, 41% of landlords are expecting rents to remain unchanged for the next 12 months and a surprising 24% expect rents to increase.
With 28% of tenants already having had their income negatively affected, either through job loss or salary reduction, and 21% concerned about income security in the next six months, this mismatch of expectations between landlords and tenants is likely to cause tension when it comes to property pricing and negotiation.
A major concern for all landlords, banks and property managers is what will happen when the payment holidays end. Landlords who have had the benefit of delaying home loan repayments may now be forced to ruthlessly pursue rents to cover their payments.
Tenants who have had the benefit of rental payment holidays could now be within days of default. Consequently, we expect the national default rate to spike this month and next month and this will have a knock-on effect on property value, credit records and general affordability by the consumer.
This tension is already beginning to show, with a quarter of all landlords surveyed listing non-payment of rent as their biggest worry going forward, followed by vacancies (19%) and late payments (16%). – Ben Shaw, chief executive of HouseME