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New data shows that tenants with lower incomes were more reliable than their higher-paid counterparts
Well over 80 per cent of residential tenants in Canada paid their rent in May. And that figure could climb to 90 per cent as more rents are being collected in instalments during the COVID-19 pandemic, says CIBC’s deputy chief economist Benjamin Tal.
The figures come as a surprise to some economists who feared that the severe rise in unemployment numbers that hit near March’s end due to coronavirus and continued through April.
“The expectation was that it would be 60 per cent or something,” says Tal, who adds that May’s numbers are looking even better than April’s, likely because some renters were still waiting on the Canada Emergency Response Benefit installment last month.
Economists were similarly surprised in April when 85 per cent of tenants paid their rent in full or in part, despite calls for a rent strike by organizations like Keep Your Rent Toronto, which continued its campaign last week, with pickets on their landlords’ lawns.
Tal says that renters in higher income brackets were responsible for more delinquencies than renters occupying lower-income brackets, despite close to 85 per cent of the 3 million job losses over the past two months occurring in low-paying occupations. “Based on that, you would expect rent payments to go down.”
But Tal points out two likely reasons why that demographic is paying rent more reliably – they are receiving CERB and enjoying rent control protections in their current accommodations.
He speculates that those tenants don’t want to compromise their tenancy by not paying rent as landlords will jump at the opportunity when possible to evict and collect market rates on those apartments.
Tal also expects the healthy numbers to repeat in June, since CERB will still be available and we’re more likely to see job gains in the coming month.
While about 85 to 90 per cent in commercial rents were paid in April, number are not yet available in May.