The widespread economic hit during the Corona period raised concerns about the upholding of contracts in various fields. The Ministry of Justice set up an inter-ministerial team to examine the subject, and one of the types of contracts examined was rental contracts for residential apartments. In order to examine the situation on the ground, the team conducted a survey among apartment tenants. As a tenant and landlord, I found the results of the survey very interesting.
One-third of respondents to the survey (33%) asked the landlord to reduce the rent or delay the payments. Among those whose income (household income) was affected in Corona, the percentage was higher, reaching 43%. How did the apartment owners respond to the request? Of the homeowners who were asked to reduce rents, only 22% answered in the affirmative. It can be assumed that apartment owners were also economically affected by the crisis, and could not afford a further decline in income. Among low-income tenants, even more sought to reduce or delay rent payments (38%), and among low-income tenants who were also economically affected by the crisis, 47% sought reduction or delay in payments. An interesting segment of the population is students who were hit economically, 51% of whom have sought a reduction or delay in rent.
The size of the sample does not allow data to be extracted from the survey for each area in the country, but in Jerusalem and the surrounding area there is a relatively large sample, and it can be determined that 26% of respondents resident in the area requested a reduction in rent (compared to 33% in Israel as a whole).
Of the tenants who requested a reduction in rent, only 22% were answered in the affirmative, and 78% in the negative. A large proportion of the tenants whose landlord did not comply with their request to reduce the rent, managed to make ends meet. Others turned to a variety of solutions – the main one being the help of family members, and others were taking loans, moving to a cheaper apartment, or returning to the parents’ home. Among the students, who in addition to the economic blow also moved to distance learning, 30% of those who received a negative answer regarding the reduction of rent, sought to shorten the rental period.
I was surprised to find in the survey a request to respondents to suggest solutions or ways of dealing with the problems in the rental market during this period. Most of the proposed solutions (about 80%) included ideas for regulation such as limiting the rent or its raise rate, while on the other hand about 20% were solutions calling for deregulation and reducing intervention in the rental market.
Did rental prices fall during this period due to declining demand? According to the Yad2 real estate index, which is based on rental ads published on the website, rental prices for apartments actually remained stable in most areas of the country in the first half of 2020.