Half of renters' mental health 'negatively affected' by COVID-19 lockdowns

author-avatar By on October 15, 2020
Half of renters' mental health 'negatively affected' by COVID-19 lockdowns

Photo by Anthony Tran on Unsplash

A survey released today revealed 40% of tenants did not have enough money for essentials after paying rent, while half are struggling with their mental health.

The Australian Housing and Urban Research Institute's (AHURI) 'Renting in the time of COVID-19' research paper also found about one in eight renters had withdrawn their super to 'make ends meet', while a third of renters accessed their savings.

Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Average super withdrawal requests averaged $7,401, according to the latest prudential regulator statistics.

Approximately 25% of tenants were "dependent on a government allowance or pension as their main source of income". 

The state with the highest dependency among tenants was in Tasmania at 39%, followed by South Australia at 36%. 

One in three renters had requested or were planning to ask for a rent reduction or deferral

Among those who had requested a change, 42% were granted a reduction, 17% entered into a rent deferral arrangement, but 30% had their request knocked back, and 6% were still waiting to hear back.

Research lead Professor Emma Baker from the University of Adelaide said the pandemic has changed the way we think about housing and renting.

"The pandemic, and the subsequent economic and social lockdown, has rapidly changed our housing system: the way we use our homes, our ability to afford them, and the role of government safety nets," she said.

"The pandemic has placed many people in the rental market at risk; they face uncertainty, tenure insecurity, financial hardship and significant mental health effects."

About 28% of survey respondents also reported they would need ongoing financial assistance in the next 12 months, however 40% said they would not, while 31% were uncertain.

Professor Baker pointed to a grim picture if there was not a vaccine available soon.

"With the on-going health and economic effects of the COVID-19 pandemic still evolving, if these savings and superannuation buffers eventually run out, renters will be entirely dependent on packages of government support," she said.

"In the absence of an effective and accessible vaccine, it is likely that the situation for renters captured in this mid-2020 snapshot will be different—and almost certainly worse—by mid-2021."

If you or anyone you know needs help:

Fewer COVID cases and lockdowns equal better outcomes for renters

The states aren't equal when it comes to the relationship between COVID-19 cases and associated lockdowns, and the uptake of government assistance.

In total, just one in twenty survey respondents had accessed JobKeeper, while 7% accessed JobSeeker, since March 2020.

In Victoria, 6% accessed JobKeeper, while just 1% accessed it in the Northern Territory, a jurisdiction relatively untouched by COVID-19.

Northern Territory renters were also less dependent on government assistance as their main source of income - totalling just 13%, compared to 21% in Victoria, or 30% in Queensland.

Additional demand for broader assistance was also "more pronounced" in southern states, with 18% of ACT households needing some assistance, along with 16% of Victorian households.

Just over one in six respondents also reported accessing income support for the first time. 

Need somewhere to store cash and earn interest? The table below features introductory and ongoing savings accounts with some of the highest interest rates on the market.

Queensland's potential eviction problem

As it stands, Queensland is the only state to not extend the moratorium on residential tenancy evictions past September.

However, it has extended the moratorium for commercial tenancies.

This has led tenant advocacy organisation Better Renting to call the scenario a "bad-tasting meal".

"If they’re [Queensland Government] not going to cook up something better, the least they could do is make sure that there’s enough to go round," Better Renting director Joel Dignam said.

"The Queensland Government has sent a clear message to people who rent: we’re not here for you.

"The virus didn’t vanish at the end of September, the economic impacts are still with us, yet people who rent are now again at the mercy of their landlord when it comes to evictions."

In September, housing minister Mick de Brenni cited Queensland's "economic strength" as reason for not extending the moratorium.

However, Queensland has the second-highest unemployment rate in the country as of August, the second-highest youth unemployment rate in the country at more than 15%, and nine of the ten leading postcodes for mortgage deferrals in Australia.

Unemployment in the state also went up to 7.7% September, up from 7.4% in August.

However, Queensland's state final demand (SFD) was -5.9% in the June quarter, ahead of Australia's GDP at -7.0%. 

Real Estate Institute of Queensland CEO Antonia Mercorella said in April that landlords were "thrown to the wolves".

Ms Mercorella also cited Queensland's relatively cheap median rental price for a three bedroom home at $360 a week as reason for not extending the moratorium.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is a journalist with more than four years of experience, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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