The Financial Impact of COVID-19 Will Get Worse for Some Renters This Summer
June 17, 2020
In April and May, many renters across the country and throughout Virginia have taken an economic hit, feeling the impact of job and income losses more acutely than homeowners; however, the vast majority of renters have been able to pay their rent. However, numerous renters remain uncertain about their financial situations and even as the overall economy begins to improve, many renters will face a growing burden paying rent later this summer.
According to the National Multifamily Housing Council, the vast majority of professionally managed renter households are paying their rent. In a Virginia REALTORS® survey, landlords and property managers say that tenants are either continuing to pay fall rent or are working out payment plans. However, there are signs that more renters will have trouble paying rent in the coming months.
While the majority of renters have been paying their rent this spring, more than one-third of renters nationally report that they will need help paying rent in the next 90 days. In addition, 42% said that they are unsure about their ability to maintain their units going forward.
Why would renters have more trouble paying rent as the economy starts to improve?
Many renters that have faced job loss have been able to receive the enhanced unemployment benefits that were made available as part of the CARES Act that Congress passed at the end of March. Individuals who lost their jobs were eligible for $600 in additional unemployment benefits. Some lower-wage workers could be earning more money while collecting unemployment benefits than from their typical paycheck as a result of these expanded benefits. This extra income has been essential in helping renters stay afloat during the economic downturn.
However, these enhanced unemployment benefits are scheduled to expire at the end of July. If unemployed renters are still out of work at that time—and there is evidence that many still will—then they will have to deal with the financial hardship that will force them to choose between paying rent and paying for other necessities.
Property managers and landlords should be thinking ahead for how to work with tenants if they are still without a job later this summer and find themselves struggling to pay rent.
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