Housing’s great income challenge

Record demands at food banks, rapidly rising arrears and even plans to build more shared housing for those who can no longer afford to pay their rent – welcome to the world of full Universal Credit.

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As full Universal Credit (UC) rolls out to new local authority areas each month, more families, communities and landlords will learn if they are truly ready for the change. The challenge is unprecedented.

The impact of UC has loomed large for landlords for years.

It was reassuring to hear the Northern Housing Consortium confirm at a recent conference that almost all its members had the impact of UC high on their risk register.

We heard from one landlord which had put UC at the top of its risk register, introduced new working practices, automated parts of customer contact and brought extra resource into the income team.

Despite this, they had downgraded their forecast for the expected percentage of total rent receipts collectable.

Some may feel this is going too far, but I see this as a rational and proportional approach, and shows what happens when the impact of UC is not only recognised, but acted upon at executive level.

The challenge is to recognise the risk but then to understand how to adapt the mitigate it.

While UC is accepted as a risk by almost everyone across the sector, my question is always the same: what are the strategic plans to deal with UC and are they realistic?

Landlords wanting to maximise rental income and protect budgets must look at new ways of working for their income teams and low risk, easy to implement solutions to support rent collection.

Income collection has historically been a simple administrative function for landlords throughout the Housing Benefit era. Today, it is business critical for all housing associations.

Other industries have long had to directly engage customers on payments and arrears. They have sophisticated strategies and processes in place to do so.

For housing the same must apply in the era of UC. Executive direction, a realistic expectation of what is achievable and a comprehensive strategic plan are all essential for survival.

For income teams, this will not simply mean scaling up resource. Last year, council housing bodies said 86% of tenants surveyed on UC were in arrears compared to 39% of tenants overall. Levels of arrears doubled for those on UC.

Landlords are starting to accept that more people ‘hitting the phones’ is neither practical in terms of results nor financially sustainable.

Those that are seeing the greatest success are changing the dynamic of their income function, employing the right kind of people in different roles that can implement new ideas and get the team working in more effective ways.

This often means staff working hand-in-hand with appropriate, modern collections technology, letting the technology do the tedious tasks that are a drain on resources, and freeing income staff to do what they do best, support families and helping maintain tenancies.

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