Tenants not only prefer to pay rent online, they are also more likely to make the payment. Data from Rent Direct that tracked 2020 rent trends has found that online payment options have actually helped increase the likelihood that tenants will make a rent payment.
Throughout 2020, property managers and landlords saw only minimal decreases in online payments compared to total declines in rent payments. Rent payments made online were also 3% higher, on average, than payments made through traditional methods.
The Rent Direct data show online payments declining only 1.5% on average from April through July. In August, however, online payments decreased a significant 10.9% before rebounding steadily for the remainder of the year. December had the highest increase in online payments, up 8.1%.
Property owners are also embracing online payment technologies at record number. In 2020, 124 new apartment owners each month have submitted applications to Rent Direct to utilize online rent payment capabilities. In March, when social distancing measures rolled out nationally, rent payment applications increased 24%, and in August, rent payment applications increased 26%. These months represent the most significant increases in rent payment applications, but throughout the year, there has been a steady flow of requests from property owners.
Online payment tools have helped increase rent collections, but local eviction moratoriums are ultimately disrupting both collections and leasing patterns. This trend has inflated occupancy rates and superficially stabilized rents. Rent Direct predicts this could lead to a market crash in 2021. When eviction moratoriums are lifted, the rental market will likely be flooded with vacancies,” according to the report. “This could very quickly lead to a decrease in property values and rental rates.”
Freddie Mac recently reviewed several apartment rent data sources, finding that rent collections were strong across the board. Rent payments, either full or partial, averaged 93.6% in May and 94.2% in June. These rates include data from National Multifamily Housing Council, The Household Pulse Survey, LeaseLock, Apartment List and National Association of Real Estate Investment Trusts.
The pandemic has illustrated the importance of online payment tools. However, most landlords interested in adopting online payment options have already done so. For that reason, there will likely be muted growth in online payment adoption next year along with a steady increase in rent collections.
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