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Rent Arrears: The human element

Everything is digital these days, even rent arrears. So what role can software play in helping landlords fulfil both their social – and their commercial – purpose by identifying at-risk tenants? Quite a lot, apparently. By Mark Cantrell


RENT arrears is a perennial issue for social landlords, as welfare reforms hit tenants and increases the risk they’ll fall behind with their payments, but it is claimed that new technology offers a powerful set of tools to tackle the problem.

One might be inclined to say, they’ll need it.

Recent research by the National Federation of ALMOs shows Universal Credit is bad news for housing associations, as it rolls their way, posing not only a threat to their bottom line in terms of rental income, but also for the social cohesion and wellbeing of the communities where they work (see boxout). As never before, then, social landlords need to be increasingly adept at identifying struggling tenants and intervening to nip problems in the bud.

“As we enter a world of full service Universal Credit the need for software that can help landlords collect rent and support income teams is greater than ever,” said John Doyle, managing director of software business Housing Contact. “Landlords are increasingly looking to technology to find ways to improve engagement with those customers who have accounts in arrears. Many are learning from outside the sector and turning to automated processes to increase engagement in the early stages.”

Data has always had a big role to play in effectively managing business, but whereas in the analogue days of yore, it may have been locked up in reams of paper, modern digital technology allows this data to be captured in a way that means it can work for its keep.

“Software can quickly and securely gather large amounts of data from a range of sources to identify those who are more at risk to financial vulnerability and debt,” said Simon Hollingsworth, managing director of Housing Partners. “Collating this data in one place can give housing providers and local authorities an accurate picture or profile of tenants. This information can assist local authorities and housing associations with decision-making and planning.”

But is technology the be-all-and-all of the matter? The old adage of ‘computer says no’ ought to serve as a reminder of why the human element matters; technology has its limits, and is no solution in itself. At the end of the day, hardware and software are tools; we forget that at somebody’s – more than likely a tenant’s – peril.

“Software and technology are tools to help reach a better outcome,” said Hollingsworth. “They are not a replacement for a human solution or empathy – but they do have a significant and unique role to play in optimising the solution. What’s important is finding a balance.

“Technology provides additional data to help make decisions and can help fuel prompt action, but the requirements for data should always come from a human decision. It can then be validated and correctly used. Software should become a tool to support work to assist with demand. Software provides the tools to do the job, but you still need the human element.”

The key to helping someone at risk of arrears is early intervention, Doyle points out. “Knowing immediately when someone has missed a payment and acting on the information quickly to signpost that person to money advice services is an objective for many landlords,” he said. “Even better would be to use data to accurately predict the likelihood on non-payment from specific customers and then to intervene in advance. As the volume of rent transactions and incidents of arrears increase, this level of support cannot be achieved effectively without appropriate technology.”

Hollingsworth agrees that early intervention is critical. “We believe that early identification of those at risk and timely intervention are key factors to creating sustainable tenancies,” he said. “Our work with housing associations demonstrates that proactive and supportive intervention, using data, can deliver a positive outcome for tenants and landlords, which could not be possible without the software.”

He added: “The ability to use data to identify those tenants with rent arrears, or those at risk of debt, enable preventative action to be taken before it is too late. Financial advice can be provided to those specific tenants who need it, to either prevent them from getting into arrears or helping them become financially stable. This should help them to manage their finances to cover the bills and costs that are priority.”

But there’s more to it than officers intervening in tenants’ lives; Hollingsworth argues the technology can also be empowering for tenants too.

“Access to online tools via mobile devices is enabling tenants to become proactive and make decisions about where they live and how they manage their own situation... It’s about creating sustainable tenancies and communities, which in turn reduces the likelihood of homelessness and anti-social behaviour,” he said.

“Software can help housing teams work smarter and more efficiently, in theory giving them more time to work face-to-face with tenants. Technology cannot replace a trained professional who can talk with a tenant and provide personalised support where needed, but it is helping to improve the way this support is given, also freeing up the time to make it possible.”

Technology is what we make it; as much as it makes us. But if we want to make the most of what it has to offer, whether in tackling rent arrears or any other aspect of life, then we can’t afford to shy away from its fast-changing nature.

As Doyle said: “It is important that organisations embrace innovation and new ways of thinking when it comes to tackling some of the challenges they face, and that is often driven by advances in technology.

It makes business sense for landlords to understand all the options available to them, and then decide on the solutions that work best.”


# # #


Engine for arrears

Universal Credit is an engine driving rent arrears, if a study by the Association of Retained Council Housing (ARCH) and the National Federation of ALMOs (NFA) is anything to go by.

Since its introduction in April 2013, the two organisations have been tracking the impact the Government’s flagship welfare benefit reform has had on instances of arrears among households living in council properties. Key findings include:

  • 86% of Universal Credit claimants living in council housing were in rent arrears, up from 79% in March 2016
  • 59% of claimants living in council homes had arrears worth more than one month’s rent
  • Although 63% of Universal Credit tenants in arrears had been in arrears before going to Universal Credit, only 44% of them were on alternative payment arrangements (APA) with direct payment from the Department of Work & Pensions
  • The average value of arrears tenants owed across Universal Credit households had almost doubled to £615 since March 2016, when the average had been £321

Such findings have obviously proved disconcerting for council landlords; they are inevitably a source of some disquiet for housing associations, as Universal Credit continues to be rolled out across the country.

“We are extremely concerned with the upwards trajectory of rent arrears for Universal Credit households,” said John Bibby, chief executive of ARCH. “Not only are numbers of households increasing as Universal Credit is rolled out, but the percentage of households falling into rent arrears and experiencing financial difficulty is critically high.

“If this trend is not reversed it will have significant impact on local authorities’ rental income streams and the long-term ability for housing departments to provide essential services to their communities.”

Hugh Broadbent, the NFA’s chair, added: “We will continue to work with the DWP to help identify and resolve operational issues and improve service performance in processing Universal Credit claims. We believe the current unacceptable waiting times and errors in processing claims are causing significant financial hardship to our tenants and communities.

“The reported increase in the presence of loan sharks within our communities is alarming, but sadly not surprising. The delay in claimants receiving benefits inevitably forces households to turn to other ways to survive, including family and friends, pay day lenders, and as a last resort loan sharks. The repayment of extortionate interest only further exacerbates a tenant’s ability to pay their rent.”


# # #


In the Money House

A study by the Cambridge Centre for Housing & Planning Research (CCHPR) has offered some insight into how social landlords’ efforts to tackle youth poverty can feedback into more sustainable tenancies.

The research, funded by the Economic & Social Research Council (ESRC), looked at a variety of schemes and initiatives social landlords were running on their own initiative to help young people aged 16-25 to increase their independence and employment prospects.

“We found that many projects run by housing providers have the potential to prevent or alleviate poverty amongst young people by improving personal skills, employability, confidence, and the ability to maintain independent living,” said lead researcher, Professor Michael Oxley.

One of the schemes highlighted by the research was Hyde Group’s Money House initiative, a training course that focused on independent living, covering banking, borrowing, income, budgeting, debt management and benefits. It also taught young people taking part how to read an electricity meter, plus skills for cooking and shopping on a budget. In its first two years, the scheme’s ‘graduates’ who had been at risk of falling into arrears had successfully maintained their tenancies.

As a spokesperson for Hyde explained, the Money House was set up with the aid of a Lottery Fund grant and was targeted very much at those deemed at risk of eviction and homelessness. It has consistently engaged young people from the hardest to reach groups, with over 500 people passing through its doors.

“Our qualitative results are outstanding, however it is our proven impact on the financial situation of graduates that sets us apart,” the spokesperson said. “We created an innovative environment where young people who may not have engaged in school can learn about topics that can be hard to teach. By using a real flat, specialist trainers and bespoke materials we have made improving young people’s financial confidence fun.”

The three-year Lottery funding has now ended, but the scheme’s longevity – and potential expansion further afield – has been secured after Hyde was able to pass on the reins to a specialist charity, MyBnk. As the spokesperson said, the “charity will be able to fulfil the Money House’s potential by taking the model to housing associations and local authorities across the country, to ensure that as many young people as possible benefit from its services”.


This article first appeared in the April/May 2017 print edition of Housing magazine

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