Germany | The effects of the Corona pandemic on the German Housing & Real Estate Companies
GdW survey on the Corona crisis: 3/4 housing companies expect higher rent losses in the future
Berlin, 4 May 2020 | Covid-19
GdW - Housing Germany, a member of Housing Europe, carried out a survey among more than 2,000 of their members that illustrates how housing companies in Germany are affected by the Corona pandemic. They face challenges especially when it comes to renting, maintenance and refurbishment of apartments as well as support for their tenants.
In the survey period mid to end-April, rent losses and deferrals have still been on a relatively low level. This is because the strict restrictive measures had only been implemented in April. In this early stage of the corona pandemic, many tenants were still financially able to pay their rent. In the time from mid to end-April, a complete default in payment has been reported for round 15,000 tenancies; this represents 0.66 percent of the tenancies of the housing companies that were questioned, and a financial loss of in total 6.8 million Euros. The companies report round 6,500 deferral requests, which accounts to 0.29 percent of the tenancies and a loss of 2.3 million Euros.
In the commercial segment, the losses are already considerably higher. Rent losses are reported for round 1,240 tenancies and amount to a financial loss of 3.7 million Euros. The total loss of rent deferrals, which concern 2,800 tenancies, is at 9.4 million Euros.
Three quarter of the survey respondents expect higher rent losses in the future. Given the ongoing restrictions, increasing numbers of short-time work and unemployment, the housing companies expect considerably higher numbers of defaults of payment and deferrals for the month of May.
When an increasing number of tenants lose their income and are not able anymore to pay their rent, this has direct consequences on the housing companies who then need to reduce their investments. 21 percent of the housing companies in the survey are already forced to cut back their investments in maintenance. Nearly one out of four companies (24 percent) also plan to cut investments in further refurbishment. GdW therefore place particular importance on the solvency of the tenants as well as on the protection of the housing companies' liquidity. They consider that the allocation of housing benefits (Wohngeld) must be further improved.
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