Epidemic takeaways: Housing

The thoughts of Marko Peterlin and Aidan Cerar on housing during the coronavirus epidemic, originally published 17 April 2020.

While the epidemic lasts, we must design measures to protect tenants. The income of some tenants will fall significantly due to epidemic mitigation measures. If we do not protect them, these tenants are threatened by eviction. After the epidemic, however, housing policy needs to be developed and implemented to mitigate the shocks of subsequent crises.

Housing is one of the most basic human needs. Although housing is mentioned in the Slovenian constitution, Slovenia has been without a serious housing policy for decades, and problems with housing supply are great. Most people live in privately owned flats and houses, which are most often either inherited or bought or built with a combination of family capital and bank loans. Those who cannot get support from their families, usually rent an apartment. Those who rent a publicly owned apartment are better off, as their rent is more predictable, while the unregulated private rental market does not provide security.

John is a freelancer. He works as an entrepreneur in Ljubljana. His parents are from the countryside. He cannot offer his services due to the current safety measures. With his rather average earnings, he hasn’t been able to save much while paying rent, so he won’t be able to pay rent next month. What should he do?

For many tenants, incomes will fall significantly during this time. Those who have barely made ends meet before – precarious workers for example – most likely do not have savings due to paying high rents. As a result, some tenants will have difficulty paying rent. If they become homeless because of this, it is the worst thing that can happen to us as a society and to individuals. These people are not to blame for the drop in their incomes, as they are victims of measures taken for the common good.

Therefore, we must first and foremost protect tenants who will not be able to pay rent in the coming months. But if the burden of non-payment was passed on to their landlords, we could trigger a new wave of problems. Some who rent out their apartment may be repaying the loan for it and would not be able to do so, so we need to protect them as well. Which means that the burden of non-payment would be borne by the banks. Here, at last, we have reached a point where even the most fiscally conservative readers will see the need for a systemic approach. And the systemic approach is called housing policy.

A couple of years ago, Franja bought a smaller apartment with the help of her parents and a loan. She now has a family and lives in a larger apartment, and rents out the smaller one. Due to the epidemic, her tenant is unable to pay the rent while she is still paying the bank loan. How should she act?

Many cities and countries are currently dealing with the question of how to protect tenants. For the most part, the common denominator of measures is to freeze the rents until further notice and defer payment of rent for a period of a few (three to six) months, combined with a freeze on mortgages.

In Slovenia, some municipalities have exempted tenants from paying rent for municipal business premises, while at the same time some municipal housing funds are already actively approaching resolving potential evictions. In cooperation with NGOs and together with tenants, they are looking for solutions to make sure that the tenants do not become homeless. But the question is how to ensure that tenants in private housing also receive similar forms of assistance. Postponing the payment of rent may not be enough. The expectation that those who were without income during an epidemic will be able to pay overdue rents in the first months after it is unrealistic.

Jure lives in a public housing apartment. So far, he is doing well, but he is worried because he does not know how long the epidemic will last. So far, he received no information from his landlord what to do if his income decreases.

However, we must not forget other vulnerable groups, who did not have a home before the epidemic. Many cities are tackling homelessness during the epidemic. Firstly, because this population is very vulnerable to infection, but also because an increase in infections among the homeless poses a risk to the wider population.

Once the epidemic is over, we must return to shaping and implementing good public housing policy. If the state and municipalities could offer rental housing to a larger proportion of the population, as is the case in the more developed part of Europe, it would be easier to help them in times of crisis, and significantly fewer residents would face the risk of losing their home. Therefore, after the crisis, the government must address housing and take on the role of the most important player. The government has to provide a sufficient number of rental apartments through national and municipal housing funds. If anything has become clear in this epidemic, it is the helplessness of the invisible hand of the market, which has failed to regulate the housing market even when times were good. Perhaps the invisible hand is not there at all and it’s better that we don’t talk about her any more.

Photo: Goran Jakovac

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