The removal or reduction of pandemic-related wage supports could result in a spike in rental arrears, the Society for Chartered Surveyors (SCSI) has warned.
The property industry body said the rental sector had, up to now, been shielded from the worst of the Covid-19 crisis by income and rental supports put in place by Government.
However, as these supports are removed “and as the full economic impact is revealed, it is likely that the figures for rent arrears will grow”, it said, noting that young professionals and students were the most vulnerable.
While the 2008 financial crash fostered a legacy of mortgage arrears, there is concern that the current crisis, which has adversely affected low and middle-income earners in the service sector, could result in a build-up of debt in the rental sector.
In a special report on the residential property sector here, which included a survey of estate agents, the SCSI found the impact of the pandemic on property sales and rental activity had, to date, been relatively benign.
It said some 56 per cent of estate agents had reported an increase or similar numbers of appraisals (instructions to market property for sale) compared to pre-Covid-19 levels since the reopening of the property sector on June 8th.
A similarly high proportion of agents reported that inquiries from prospective purchasers and property viewings had increased or were comparable to pre-Covid-19 numbers. The strong numbers were linked to “pent-up demand” within the sector.
The SCSI said two-thirds of agents reported that property values remained unchanged when compared to pre-Covid-19 time, with 28 per cent reporting that property values had declined.
Bidding activity
The report did, however, detect a decline in bidding activity as a result of the crisis, which fell by 8 per cent, while about 10 per cent of property transactions have been renegotiated in light of the changed circumstances.
When asked about those purchases that continued during Covid-19, 60 per cent of agents reported that the main reason for sales progressing was due to a buyer finding the property that matched their needs, while the second main reason was not allowing the loan offer to lapse (25 per cent).
In the rental sector, the survey found only 8 per cent of tenants did not meet their monthly rent as a result of the crisis with only a third of these providing “satisfactory evidence for the inability to pay”.
The Government introduced new legislation this month to protect tenants who have fallen into rent arrears, which includes a ban on all evictions and a ban on the issuing of termination notices to tenants.
“Since the reopening of the residential property market in June, activity in most parts of the country remains brisk. Pent-up demand, especially in the sales market, resulted in increased activity levels especially among viewings and inquiries as experienced by most agents,” the SCSI’s report said.
“Confidence within the house purchasing market remains strong especially among those who have been unaffected financially by Covid-19 or those who had finances in place when the sector reopened,” it said.
