Renters to face more affordability pressures as expenditure increases

29 July 2020 | General

Private renters are set to face affordability pressures long-term as expenditure rebounds quicker than incomes.

Between March and June falls in income from renters have been offset by a falls in expenditure on things like childcare, transport and recreational activities.

The research comes under a programme of work between the Department of Housing, Planning and Local Government and the Economic and Social Research Institute.

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.”

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.

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.”

This post has originally been featured in Property Wire.