Rental affordability pressures likely offset by unique lockdown situation but challenges lie ahead
Research published today, under a programme of work between the Department of Housing, Planning and Local Government and the Economic and Social Research Institute examines the short-run impact of the pandemic on rental affordability and missed payments for private renters not previously in receipt of state housing supports.
The research finds that one-in-three such renters faced considerable affordability challenges prior to COVID-19. However, in the period mid-March to mid-June 2020, the unique and extraordinary circumstances mean affordability pressures are not likely to have worsened, despite a greater fall in incomes experienced by renters relative to homeowners. This is because short-run falls in spending (such as on childcare, transport and recreational activities) are estimated to outweigh the decline in incomes during the lockdown which were supported by the Pandemic Unemployment Payment and Temporary Wage Subsidy Scheme.
However, these are very short-term effects and unique to the time in which households have been advised to stay at home and restrict movements. Many renters face longer-term affordability pressures that are likely to worsen quickly, as necessary expenditure rebounds quicker than incomes. As renters are more likely to work in sectors badly hit by the pandemic (such as accommodation and hospitability), this may pose longer-term employment challenges if these sectors are slow to recover.
In terms of rental arrears, survey data suggest one-in-ten households missed payments prior to the pandemic and, given the affordability trends, this is unlikely to have risen substantially in the short term. Notwithstanding this, the report finds a clear and evident data gap in terms of measuring rental arrears; no current, real-time national data is available at present. Addressing this gap should be a priority.
Conor O’Toole, an author of the report and a Senior Research Officer at the ESRI, said:
“The very extreme and unique set of circumstances during the lockdown may have provided many households with a buffer to cover rental payments as other spending pressures declined. However, these are very short-term effects and unique to the lockdown. Many private renters face longer-term affordability pressures that are likely to worsen quickly as spending needs (such as on transport and childcare) rebound quicker than incomes.”
Rachel Slaymaker, author of the report and a Post-Doctoral Research Fellow at the ESRI, said:
“The pandemic related unemployment crisis is concentrated in sectors of the economy (such as accommodation and food) whose employees are more likely to be renters than homeowners and as such renters have seen their incomes fall to a greater extent. This may further enhance affordability pressures if incomes are slow to rebound. Any tapering of the income supports will thus have a disproportionate effect on this group.”