Landlords and real estate agents are concerned about the cost of living and consider the occurrence of tenants’ payment difficulties to be a realistic outlook, according to the recent survey commissioned by Rendin and conducted by Norstat. At the same time, landlords’ and real estate agents’ knowledge about solving rental problems is poor.
‘It was concluded in the study that most landlords (82%) are concerned about the ever-increasing cost of living. An equal number of them believe that it is likely that tenants will have problems paying rent and utility bills in the near future, and 72% fear a sharp increase in the number of tenants that do not pay rent at all,’ says Alain Aun, the CEO and co-founder of Rendin, which is a solution for renting (out) homes and concluding secure rental agreements.
Real estate agents are also concerned. According to the study, 93% believe that the current economic situation will result in payment difficulties among tenants. Then again, a sudden increase in cases where tenants do not pay rent at all is not considered likely.
‘In dealing with difficult problems, such as an indebted tenant, it is first of all important to have a competent agreement: termless, equally considering the interests of both the landlord and the tenant, and without illegal special conditions. Secondly, even more important is the presence of legal competence or support to know how to act legally,’ explains Alain Aun.
The same study found that 71% of landlords do not know under which conditions and how quickly it is possible to get rid of an indebted tenant. The lowest level of information is among landlords under 30 and people who do not use rental agreements.
Landlords with six or more rental spaces are more aware. 47% of them were able to answer correctly: the agreement can be terminated in an emergency, and it is possible to get rid of the debtor in 2–3 months. This, of course, applies if the landlord follows the law correctly.
Also, every other real estate agent has no idea how long or short the process of getting a problem tenant out of an apartment is.
To mitigate the risks of a tenant who fails to pay bills, real estate agents advise their clients to:
ask for more than one month’s deposit (35%),
write an additional clause in the contract (21%) that permits the landlord to terminate the agreement with a shorter notice period, such as one month.
‘The first solution would put many tenants in a bad situation since all costs are still very high. If we take, for example, the rent of an apartment with an average price range is 600 euros, the starting cost of a tenant when moving in is around 2,400 euros (first month’s rent, two months’ deposit, and broker’s fee),’ comments the CEO of Rendin. ‘It is true, for example, that landlords have started asking for a two-month deposit for more luxurious rental apartments, where, as a rule, the tenants are also better off. But in general, this recommendation is of no use. This can also be seen from the advertisements mediated by real estate agents – the amount of one month’s rent requested as a deposit dominates.’
He adds that the second suggested solution is against the law. Both fixed-term and termless rental agreements have their termination conditions in regular and extraordinary situations.
In conclusion, Aun says the results were surprising and sometimes even contradictory. ‘Mainly because, among other things, when we mapped the real estate agents’ value proposition in the study, they rated drafting a legally competent lease agreement first (73%). This requires knowledge of the law, which is not reflected in knowledge.’
Read more from Rendin Blog: What to do when a debtor tenant has vanished?
‘Both the results of the survey and the feedback we receive daily from the landlords on our platform clearly show that the rental property’s owner needs protection from potential problems. This means financial security if the landlord comes across a tenant who fails to pay rent and utility bills or causes property damage,’ explains Alain Aun. ‘Providing legal expertise is equally important if the person dealing with renting out lacks relevant knowledge.’
‘Rental relationships do not only consist of advertising, finding a tenant, and concluding the agreement. This is just the beginning. The whole picture and a view of what is happening throughout the rental agreement are most important,’ states Aun.
‘Looking at how few opportunities there are, especially for landlords, to protect themselves, it can be said with certainty: the practices of the rental market, which have remained unchanged for decades, and the way of thinking associated with it, are obsolete. The rental market requires change,’ he adds.
Read more from Rendin Blog: Every other landlord has had a problematic tenant
Date: September–October 2022
300 landlords currently active in the rental market participated
100 real estate agents who mediate rental apartments participated
The study asked about the profile and experiences of landlords/real estate agents and wanted to know a little more broadly about the current rental market.