Apartment rent payments started to waver in early June, illustrating signs of growing economic disruption. April and May rent payments fell nominally—by about 4% for first-of-the-month payments—held up by landlord rent deferral programs and government assistance. In June, first-of-the-month payments fell another 2%, a 6% decrease compared to pre-COVID rent collections, according to research from LeaseLock.
“In April and May, we did see a decrease from the average in rent-payment behavior, and between April and May, rent payments did hold steady, suggesting the renters who could pay were paying,” Rochelle Bailis, VP of marketing at LeaseLock, tells GlobeSt.com. “For June, this is the first time that we are seeing a slight but notable crack in rent-payment behavior. That is the first time that has happened post-COVID.”
The decrease in June rent is specific to first-of-the month payments. There will be a better picture of June rent trends at the mid-month and, of course, at the end of the month. However, the first-of-the-month payments certainly represent a changing trend. “We are talking about first-of-the-month payments,” says Bailis. “Those are people that are usually proactive; they have the money, and they pay the rent. Now, we are seeing people pausing to determine where they are financially.”
More renters are also starting to seek rental assistance programs. In mid-May Google searches for rent assistance spiked, according to LeaseLock. While the expanded unemployment provided by the CARES Act lasts through the end of July, the trend suggests that renters are already struggling with rent payments. “We are seeing some of the benefits dry up,” says Bailis. “For example, the $600 additional unemployment benefits are drying up at the end of July, and there is no backdrop solution that has come through.”
The HEROES Act, currently up for vote in the Senate, will provide more assistance, but there is serious doubt that it will pass. Short of another relief plan, June could be a mild indicator of rent collections later this year. “Between unemployment and the stimulus checks having been but more than a month ago now, I think renters are holding funds closer to the belt,” says Bailis. “It isn’t anything alarming yet, but it is a signal of what might come if other relief solutions aren’t approved.”
At the start of the pandemic, landlord-tenant partnership play a significant role in boosting rent collections before government stimulus funds and unemployment arrived. Those policies continue to play an important role, and the data—which shows increasing partial payments—suggests that landlords are continuing to execute those arrangements. “With our clients, we know they are proactively offering and pursuing payment plans and alternative payment arrangements,” says Bailis. “We are not seeing any landlords falter in those plans, and they are still strongly motivated to keep residents who have fallen on hard times in-unit. However, this is an indicator that some residents aren’t able to make those rent payments on the first of the month, which means that some people are only able to make a smaller payment than they were in the past.”
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