Sustainable Tenancies:

Debt Recovery

For the majority of social landlords, rent is the largest source of income for their organisation, so the ability to streamline resources as much as possible in the face of ever-growing challenges is paramount. Setting up sustainable tenancies in partnership with residents can work to prevent fresh arrears, while new technologies are facilitating the recovery of longstanding debt before the six-year point, at which it becomes statute barred and therefore, irrecoverable.

Rent or mortgages are priority debts and a responsibility that the majority of us have to bear. Universal Credit will bring this responsibility directly into the hands of all recipients of the benefit and whilst for some this will be an easy transition, for others who are less financially literate, the transition could jeopardise both their own futures as well as that of a housing provider. These changes have led to a wealth of housing providers across the country diversifying their staff base to increase debt and income recovery roles, as well as wellbeing or social work positions to develop a multidisciplinary approach to income collection.

The impact for housing providers of tenants falling behind on rent is significant and can divert funding away from the staff and schemes that support their most vulnerable tenants. For residents too, the consequences are just as real, with the potential to cause lasting damage. Significant implications, such as wage arrest or eviction should be accounted for at the earliest stages of a tenancy to avoid residents falling into this situation. This journey starts pre-tenancy with thorough checks and co-created plans to ensure that no-one moves into a property that they can’t afford. With both prospective and current residents, it is wise to identify those with poor financial literacy and guide them towards affordable financial products and free advice. A lack of digital capability can also be a factor here, as paying rent, registering notice and other housing-related services are transitioned to a digital format.

“We get involved from when they first go into arrears so things don’t escalate…I guess the issue for them is intervening at the right stage in the right way to ensure it doesn’t escalate… We’re all about prevention and not reacting afterwards and it does make a significant difference.”

UK Collaborative Centre for Housing Evidence

Debt is no small issue and can rob a housing provider of the salaries for support staff and other front line services; in Lambeth alone, just 597 multiple debtors owe the local authority over £3million. Without intervention strategies, the in-tenancy and post-tenancy options for retrieving arrears can become more serious. Tactics can include ‘wage arrestment’, which compels employers via the courts to surrender an amount of pay directly to a Housing Association, freezing tenant bank accounts or ‘Exceptional Attachment Orders’ whereby goods are taken from a home and sold at auction. Beyond these extreme measures, an individual may apply for bankruptcy or a Debt Relief Order (DRO), however at this point income cannot be returned to a housing provider unless there is a legitimate case for Housing Benefit or Universal Credit Fraud.

CASE STUDY: Midland Heart, System Alerts

Midland Heart housing organisation adopted an automated dialler system which calls customers as soon as they fall into arrears. The calls are free and redirect callers to a finance officer. 65% of these calls result in customers choosing to talk to a member of the team, compared to 10-15% with the previous method of cold calling. This channel now collects 27% of cash payments for the organisation and only takes up 12% of income officer time.

CASE STUDY: Optivo Housing with CfRC, co-creating payment plan

A pilot scheme that Optivo Housing ran for Supported Rent Flexibility gave working parents with a history of low arrears the opportunity to work with their Housing Association to tailor their rent plan for a year. This scheme allowed customers to choose when to overpay or underpay rent at certain ‘pinch points’ in the year such as ‘back to school’ time or Christmas. Though small, with only 60 participants, the scheme benefited tenants by £1,200 per year on average, while the flexibility made them less likely to opt for bad credit when ready cash was tight. Participants also reported greater wellbeing and improved mental health throughout the scheme.

CASE STUDY: Cornwall Housing working with Housing Partners

Housing Partners worked closely with Cornwall Housing on a unique solution to recover former tenant debt on their oldest debt. This consists of debt that is 5 or 6 years old, as after 6 years the debt becomes statute barred and is no longer recoverable. Housing Partners initially took on 500 Former Tenant Arrears (FTA) cases that were returned from a previous supplier after they could not be traced and left with no alternative than to pass these for write-offs. Using the solution, Cornwall were quickly able to trace some of these FTAs and design payment plans with those individuals.

“Housing Partners has had a real positive effect on our FTA collection rate, as well as increasing our income stream. We would most likely have written these debts off had we not worked in partnership with them. We have collected over 4 times what we have invested, and this is growing every day,” said Paul Oxford Finance Manager at Cornwall Housing

Protection of income, alongside the security and stability of residents are the two core objectives for a housing provider. In recent years, legislation change and limited funding have caused more organisations to collaborate with one other and seek out new partnerships for innovative and efficient solutions. It’s clear that the remit of a housing provider is broadening, alongside a shift in expectation that incomes will be protected by investing in the advice, guidance and co-creation of payment pathways. More than simply income protection, housing providers are working with residents to support and sustain them through more holistic approaches, meaning that debt recovery and prevention ultimately serve to ensure the creation and maintenance of sustainable tenancies throughout a provider’s housing stock.

If you want to know more about how we are supporting housing providers maintain their sustainable tenancies, contact us on