The widespread economic troubles during the current COVID-19 pandemic have raised concerns about the upholding of contracts in various fields. The Justice Ministry set up an inter-ministerial team that has examined rental contracts for residential apartments. In order to investigate the situation on the ground, the team conducted a survey among apartment tenants. As both a tenant and a landlord, I found the results of the survey very interesting.
One-third of respondents (33%) asked their landlords to reduce their rents or to delay payments. Among those whose household incomes have been affected by the pandemic, that number was 43%.
How did apartment owners respond to these requests? Of the property owners who were asked to reduce rents, only 22% agreed. It can be assumed that apartment owners have also been affected economically by the crisis, and might not be able to afford a further decline in income. Among low-income tenants, 38% sought to reduce or delay rent payments, and among low-income tenants who were also economically affected by the crisis, 47% sought reductions or delays in payments. Among students who have been impacted by the pandemic, 51% sought reductions or delays in rent payments.
The size of the sample does not allow data to be extracted from the survey for each area of the country, however, there is a relatively large sample from Jerusalem and the surrounding area, and it can be determined that 26% of residents in this area requested reductions in rent.
A large proportion of those tenants whose landlords did not agree to reduce rents managed to make ends meet. Others turned to a variety of solutions, the main one being the help of family members. Others were taking out loans, moving to cheaper apartments, or returning to their parents’ homes. Among students, who in addition to the economic upheavals have had to adjust to distance learning, of those whose landlords would not reduce rents, 30% sought to shorten their rental contracts.
I was surprised to find that the survey asked for suggestions in how to deal with the problems in the rental market during this difficult period. Most of the proposed solutions (about 80%) included ideas for regulation, such as limiting rents or the amounts by which they can be raised, while some 20% suggested deregulation and reduced interventions in the rental market.
Has declining demand led to falling rental prices fall during this period? According to the Yad2 real estate index, which is based on rental ads published on that website, rental prices for apartments actually remained stable in most areas of the country in the first half of 2020.